The Australian share market rose the most in two weeks Tuesday as China's stronger-than-expected GDP fuelled expectations of a soft landing for Australia's biggest trading partner, and as sovereign credit rating downgrades by Standard & Poor's failed to spook European debt markets. The benchmark S&P/ASX 200 closed up 1.7% at a five-week high of 4215.6 points. Trading volume was light after Martin Luther King Day in the U.S. Overnight, Europe's Stoxx 600 advanced 0.8% as French bond yields fell after successful auctions of French debt. BHP Billiton rose 2% as London Metal Exchange copper futures advanced 1.6% in Asian trading, adding to a 1.8% overnight gain, after China's GDP rose 8.9% versus 8.6% expected by the market, yet lower than the previous quarter's growth of 9.1%. Woodside Petroleum, Origin Energy and Santos jumped 1.9%-3.8% as Nymex crude oil futures rose 1.3% to US$100 in Asian trading after rising 1% on Monday.

Paladin surged 12% after its uranium production set records, while Fortescue Metals closed up 3.9% after its second quarter production report. QBE Insurance rose 3.8% as it continued to recover from a profit warning last week, while Leighton Holdings surged 5.4% after Macquarie Equities upgraded its rating to Outperform on the back of improved first-half earnings guidance released Monday. Paladin's uranium output for the 12 months to Dec. 31 rose 9.2% to 5.93 million pounds. Production was expected to fall to 7.1 million-7.4 million pounds of uranium in the year to June, following unscheduled shutdowns of some operations at its Kayelekera mine in Malawi, and a later-than-scheduled ramp-up of production at its flagship Langer Heinrich mine in Namibia. Fortescue Metals said its iron ore shipments rose 19% to 14.8 million tons in the December quarter versus the previous quarter, beating its guidance of 14 million tons. Fortescue achieved an average cash cost of US$46.43 a ton and an average selling price of US$122 per dry ton of iron ore. Elsewhere, Rio Tinto reported record iron ore production of 65 million tons in the fourth quarter. Its shares rose 1.3% to A$65.70. Analysts were awaiting production figures from BHP, Woodside and Santos in the next few days.

The Australian dollar surged Tuesday on better-than-expected growth in China, pushing the currency to its highest level since early November. After trading largely range-bound for much of the morning action, the Australian dollar leapt higher after data showed China's gross domestic product growth slowed slightly in the fourth quarter to 8.9%, but exceeded market expectations centered on an outcome of 8.6%. Aside from driving the currency higher, the data hit Australian bond prices on both ends of the curve. Even so, some in the market noted that with a bevy of information still to come this week, the gains could be short-lived. Also impacting trading was light volume on markets thanks to a holiday in the U.S. The Australian dollar was trading at $1.0382, up from $1.0277 late Monday and just off a session high of $1.0396. Against the Japanese yen, the Australian currency changed hands at 79.683, up from 78.963.