Australian shares higher after Wall St rebound

Share prices were sharply higher in midday trade following a rebound on Wall Street overnight on speculation about the possibility of a further US Fed interest rate cut this year, dealers said.

They said however, the gains only reflected a technical rally, with investors still trading for the short term and quick at profit-taking.

"It is difficult to interpret that a move of such magnitude (in the US) is anything other than a bear market rally," a dealer with Credit Suisse First Boston said.

"Bull markets typically do not enjoy such large one-day moves, whereas bear markets often contain relief rallies of this size," he said.

"I do not know what is around the corner, but given the psychology of the market, testing of the lows of the US and the local markets cannot be ruled out. (Investors should) adopt the bear-market model - selling on rallies and buying only certain (companies reporting) earnings," the dealer said.

At 12.55 pm, the S&P/ASX 200 was up 52.9 points at 3,038.5 and the All Ordinaries Index was up 49.1 at 2,986.9.

The S&P/ASX September futures index was up 56.0 at 3,023.

Resources rebounded sharply, with BHP up 0.45 aud or 5.42% at 8.75, Rio Tinto up 1.18 at 31.36, WMC up 0.32 at 7.75 and MIM up 0.02 at 1.06.

The dealer, however, said despite the rebound, "I cannot see much upside in the sector while the market focuses on the slowing US and global (economies)."

News Corp rose 0.50 aud to 9.27, with its preference shares up 0.37 at 7.83.

Telstra was up 0.03 at 4.75. SingTel was up 0.05 at 1.49 after the company released better-than-expected quarter to June results.

Banks performed generally in line with the market.

NAB firmed 0.71 to 34.53, Commonwealth Bank gained 0.87 to 30.97, ANZ added 0.33 to 18.10 and Westpac rose 0.22 to 15.03.

AMP was up 0.43 at 13.37.

Qantas was steady at 4.60.

Wesfarmers gained 0.11 to 29.25, while Pacifica lost 0.01 to 3.79.

Coles Myer was up 0.07 at 6.18, Woolworths up 0.07 at 11.95, and David Jones up 0.04 at 1.02 following its solid full-year to July sales results and the upgrade of its full-year profit guidance.