News: XGD Australian shares post best monthly gain in 3 years, close 2023 8% higher

	  AXJO posts biggest monthly gain since Nov. 2020 

	  Miners record best month since Jan 

	  Gold sub-index posts best yearly gain in four  

(Updates to close)

Australian shares closed lower in thin trading on Friday but posted a yearly gain, helped by a rally in December, as optimism about interest rate cuts early next year boosted market sentiment in recent weeks.

The S&P/ASX 200 index (xjo) fell 0.3% on Friday to end the year at 7,590.80 points. The benchmark rose 7.1% in December, its best monthly gain since November 2020, and logged a yearly gain of 7.8%.

Australian shares have been rallying as prospects of rate cuts by key central banks have boosted investors' risk appetite.

"There is little new news to change the narrative of easing financial conditions and expectations that equities can push higher... The softness today does little to shift this view," said Kerry Craig, global market strategist at J.P. Morgan.

Monetary policy regulation by global central banks has been the key theme influencing investor sentiment during the year.

Central banks were firmly in the driving seat in 2023 as markets first repriced a higher-for-longer rate environment and then one in which expectations of policy easing accelerated, added Kerry.

In Sydney, heavyweight miners snapped a three-day rally on Friday, declining 0.7% as iron ore futures slid on Thursday after estimates showed a continued contraction in manufacturing activity in China.

The sub-index, however, posted its biggest monthly gain in 11 months, climbing 8.7%.

Gold stocks .AXGD lost 2% on Friday after bullion prices remained range-bound, but posted a yearly gain of 24.5%, the index's biggest in four years.

Rate-sensitive financials .AXFJ dropped 0.2% on Friday with top lender Commonwealth Bank of Australia (CBA) losing 0.4% after touching an all-time high on Thursday.

However, the sub-index posted its best monthly gain since October 2022, while adding 5.7% for the year.

Energy stocks .AXEJ fell 0.9% on Friday after oil prices were set for their first annual fall in two years, with the sub-index logging a yearly loss of 3.8%.

New Zealand's benchmark S&P/NZX 50 index (nz50) ended flat at 11,770.49 points. The benchmark added 2.6% for the year.