Jan 11 (Reuters) - Australian shares rose on Wednesday morning after a rally in commodities drove strong gains in metals and mining stocks, helping lift their index to a two-year high.
The S&P/ASX 200 Index gained 0.5 percent or 26.57 points to 5786 by 0106 GMT. The benchmark ended 0.8 percent lower on Tuesday.
Shanghai steel futures jumped 7 percent to their highest in nearly three weeks on Tuesday, supported by promises from China’s top steelmaking province to further reduce production capacity.
Among other metals, copper hit a one-month high following further signs of a pick-up in China’s economy, while zinc scaled a three-week peak on persistent supply shortages.
All of this underpinned the resource-heavy Australian market.
“The reason why the commodities or the materials sector is doing well today is because metal prices were up overnight, almost entirely across the board,” says Christopher Conway, Head of Research and Trading at Australian Stock Report.
The metals and mining index was up as much as 3.33 percent, touching its highest since September 2014.
Fortescue Metals Group jumped 3.4 percent, while global miners Rio Tinto surged 4 percent for its biggest intraday gain in two months and BHP Billiton rose 3.2 percent.
BHP Billiton said its chairman and chief executive held positive talks with U.S. President-elect Donald Trump on Tuesday. BHP’s U.S. investments include billions of dollars in onshore shale oil and gas production and deepwater oil stakes in the Gulf of Mexico.
Whitehaven Coal extended gains to climb 2.9 percent. Coal exports from Australia’s Queensland state, one of the world’s biggest suppliers to China, hit record levels for the third year in a row in 2016, data released on Tuesday showed.
Gold hit a six-week high on Tuesday, supported by earlier weakness in the dollar. That lifted Newcrest Mining 1.2 percent and Resolute Mining 3.6 percent.
Financials bucked the broad trend, but Australia and New Zealand Banking Group was one of the few banks in the black, gaining 0.2 percent after it agreed to sell New Zealand subsidiary UDC Finance to China’s HNA Group for about NZ$660 million.[ nL4N1F04P1]
New Zealand’s benchmark S&P/NZX 50 index rose as much as 0.3 percent to its highest level in over 12 weeks.
Utilities and industrials gained the most with Contact Energy rising 1 percent and A2 Milk Company gaining 1.4 percent.
For more individual stocks activity click on (Reporting by Sindhu Chandrasekaran in Bengaluru; Additional reporting by Hanna Paul; Editing by Shri Navaratnam)