Iron ore price, page-21839

Australian shares rally 1.1pc; Iron ore shines; Fortescue now bigger than Woolworths

Robert Guy

The Australian sharemarket started the new month with a 1.1 per cent rally on Monday, as iron ore miners powered higher and banks bounced off their session lows.

The S&P/ASX200 Index gained 63.5 points, or 1.1 per cent, to 5819.20 points, rallying of a negative start to the week that pushed the index to an intraday low of 5705.4 points.

BHP, Rio Tinto and Fortescue Metals group paced the markets advance as iron ore price surpassed $US100 a tonne and more signs emerged of a recovery in China's economy.

Fortescue Metals Group was the standout of the Pilbara trio, rallying 6.4 per cent to a record $14.79.

Its market capitalisation of $45.5 billion helped it vault over Woolworths, which has a market value if $44.5 billion, to become the ninth largest company in the benchmark index.

Woolworths has been relegated to number 10 in the ASX200 after Fortescue's big day.

BHP gained 3.1 per cent to $35.71 and Rio Tinto added 4.1 per cent to $97.23.

Banks poured fuel on the rally as they bounced off their early lows. After initial selling, all of the big four bank ended the day in the green.

Commonwealth Bank added 0.2 per cent to $63.90, Westpac and NAB gained 0.8 per cent, while ANZ bounced 0.9 per cent.

Building materials also performed strongly amid reports the government is set to provide stimulus to support the housing construction sector.

Cement producer ADBRI, formerly Adelaide Brighton, was the second best performer in the index with an advance of 8.8 per cent.

Boral added 6.7 per cent and Fletcher Building rose 5.3 per cent.

Among other blue chips, Woolworths fell 0.2 per cent to $35.28, Wesfarmers advanced 0.7 per cent to $40.66, and Telstra fell 0.6 per cent to $3.22.