Miners show allure as US continues to lift

Australian shares followed the lead of overseas markets and recorded a second day of gains, underpinned by data suggesting the US economy is accelerating.

The market has clawed back heavy losses from earlier in the week, fuelled by poor employment figures from the US.

The S&P/ASX 200 Index surged 63.7 points, or 1.2 per cent, to finish Thursday's session at 5309.1. The All Ordinaries rose 63.9 points, or 1.2 per cent, to 5319.4.

Overnight on Wednesday, US shares were buoyed by a rise in producer prices, as well as strong earnings from Bank of America, JPMorgan and Wells Fargo.

The Dow Jones Industrial Average pushed 0.7 per cent higher, with the Nasdaq adding 0.8 per cent and the S&P 500 rising 0.5 per cent.

''Out of the US [earlier in the week] there was a lot of hand-wringing going on about how equity markets had a trying couple of days.

albeit at a time when liquidity is not the best,'' BlackRock Australian head of fixed income Stephen Miller said.

''My reading of the US data is that growth in the US is going to accelerate this year, tapering will occur. Equity markets aren't cheap, but in an environment when the globe is going to have synchronised growth for the first time since 2010, the prospects for getting the earnings going and supporting current equity valuations are reasonably good.''

Helped by a falling dollar, which slipped to its lowest since August 2010 at US88.13¢, miners led the market higher.

''With the Australian dollar dropping a cent, what that leads to is all the miners make significantly more money. So the miners have continued to outperform and the banks become less attractive to overseas investors,'' Market Matters principal Shawn Hickman said.

Iluka Resources added 7.6 per cent to $8.89 despite the mineral sands miner reporting that revenue for the year to December fell 28.6 per cent to $763 million.

Rio Tinto gained 2.1 per cent to $65.58 after it reported it had beat guidance on its two most important commodities, iron ore and copper.

After saying on Wednesday it would repay $US1.6 billion ($1.79 billion) in debt, shares in Fortescue Metals continued their strong run, jumping 3.8 per cent to $5.53, despite news that four incidents involving safety were being investigated by the West Australian Department of Mines and Petroleum.

''Overall, I am positive about the market but I think the banks are not the place to get the best returns this year,'' Mr Hickman said.

Woodside Petroleum advised it would write down as much as $US400 million on oil and gasfields in Western Australia. But some of that would be offset by up to $US250 million in benefits from the petroleum resource rent tax, which helped lift shares 2.7 per cent to $38.63 on expectations of a dividend rise.

Qantas added 1.4 per cent to $1.11 despite two of its biggest rivals forming a new alliance. Singapore Airlines announced a tie-up with Air New Zealand that is expected to put further pressure on Qantas' unprofitable international arm.