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Australia: Shares rise most in over two months on rate-cut bets

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[BENGALURU] Australian shares climbed on Wednesday by their most in more than two months as expectations grew that the central bank would cut interest rates in two weeks.

Westpac economist Bill Evans said he expects the Reserve Bank of Australia (RBA) to further cut rates from a record low of 0.25 per cent, sending the Australian dollar and three-year bond yields lower.

The view follows a speech by RBA deputy governor Guy Debelle on Tuesday where he signalled the likelihood of more monetary easing, and after National Australia Bank economists said they see a "significant risk" of a cut to the cash rate.

Sydney's ASX 200 index closed 2.4 per cent higher, snapping four straight sessions of falls.

"Westpac has now joined the chorus of people talking about a rate cut, which seems to have got the market all excited, especially in the over-sold sectors like banks," said Henry Jennings, a senior analyst and portfolio manager at Marcustoday Financial Newsletter.

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Almost all stocks in the financial sector closed higher with the big-four banks adding between 1.9 per cent and 2.9 per cent.

Service Stream was the top gainer on the benchmark, jumping around 14 per cent, after the National Broadband Network announced plans to upgrade infrastructure.

Tech stocks tracked an overnight rally in their US counterparts and closed 2.7 per cent higher.

Buy-now-pay-later sector bellwether Afterpay climbed 2.9 per cent, while smaller peer Sezzle jumped on a partnership with a unit of Ally Financial.

In New Zealand, the benchmark index ended 0.8 per cent higher at 11,704.62.

In a widely expected move, the central bank held its official cash rate at a record low, but hinted at further easing and warned the economy may need support for a long time as the world grapples with the coronavirus pandemic.

Local shares of Australia and New Zealand Banking Group and Westpac added 0.8 per cent and 0.4 per cent, respectively.

REUTERS

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