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Shares hit a fresh three-month peak following reports the US and China are “close” to completing a trade deal.

The ASX 200 rose 47 points or 0.7 per cent to 6782, extending initial gains as US index futures surged mid-morning. The rally positioned the benchmark Australian index for a second straight winning week and brought it briefly within 55 points of its July record close.

S&P 500 futures charged 12 points or 0.4 per cent following reports senior US and Chinese trade negotiators will tonight try to complete a draft ‘phase one’ trade deal. The report, attributed to unnamed Chinese sources, followed talks at deputy level overnight. Separately, White House economic adviser Larry Kudlow told reporters Washington was “getting close” to a deal.

The trade news added fuel to a solid initial rally built on gains in share proxies as bond yields declined. A choppy week on the ASX saw the market retreat from Monday’s three-month high as US-China trade talks stalled, before kicking higher yesterday after weak employment figures rekindled expectations of another rate cut next year. The dollar sagged, bond yields slumped and traders turned to the stock market for alternatives.   

Today’s gainers included safe, dividend-paying companies such as Woolworths, up 0.7 per cent to an all-time high; Coles, up 1.3 per cent to a record; and a host of real estate trusts.

Smaller companies have trailled their larger counterparts this month, but the Small Ordinaries Index broke out of its recent trading range this morning to bring a three-month closing high within reach. The Small Ords rose 0.7 per cent.

BHP rose for a second day following news that Mike Henry will replace Andrew Mackenzie as CEO next year. Shares in the Big Australian rose 1.5 per cent. Rio Tinto put on 0.9 per cent.

The banks trailled as a 0.9 per cent decline in NAB partly offset a 1 per cent rise in CBA, and gains of 0.2 per cent in ANZ and Westpac.   

Bellamy’s climbed 1.9 per cent after the Foreign Investment Review Board greenlighted a takeover of the baby formula maker by the China Mengniu Diary Company. Graincorp surged 8.1 per cent after the Australian Competition and Consumer Commission said it won’t block the grain business’s sale of its bulk liquid terminals business to ANZ Terminals.

Financial admin company Link Administration climbed 4.1 per cent to a five-month high after reaffirming guidance for the year ahead. Flexigroup slipped 1.2 per cent after updating investors on its buy-now-pay-later  venture, humm.  Car dealer A.P. Eagers skidded 8 per cent a day after issuing a profit warning.

What’s hot today and what’s not:

Hot today: long-suffering shareholders in internet venture firm Fatfish Blockchain enjoyed a payday as the share price surged on news the company had sold its Swedish subsidiary. Shares that traded as high as 22 cents in 2015 and as low as eight-tenths of a cent earlier this month briefly doubled this morning to 1.6 cents. The company has accepted an offer from a Swedish investment firm of $12.7 million for Fatfish’s Swedish subsidiary, FGV. The offer was almost twice Fatfish’s market capitalisation of $7.4 million.

Not today: the cost of cleaning up after uranium mining near Kakadu forced Energy Resources of Australia to pass the hat around this morning. The share price slumped to 19 cents after the company announced a capital raising at 15 cents – a 38 per cent discount to the 24 cents shares cost yesterday. Majority shareholder Rio Tinto announced it will underwrite the $476 million raising to rehabilitate the Ranger Project Area.

Asian markets were mixed. China’s Shanghai Composite slipped 0.1 per cent in opening action. Hong Kong’s Hang Seng gained 0.7 per cent and Japan’s Nikkei 0.8 per cent.

Turning to commodity markets, Brent crude futures reversed overnight falls, advancing  30 cents or 0.5 per cent to $US62.57 a barrel. Gold faded $4.70 or 0.3 per cent to $US1,468.70 an ounce.

On currency markets, the dollar rose almost a fifth of a cent to 67.97 US cents.

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