The Australian share market closed higher on Monday, led by financials and resources, as a possible merger between the Australian Stock Exchange and Singapore Stock Exchange boosted positive sentiment. The benchmark S&P/ASX200 index finished up 61.8 points, or 1.33 per cent, at 4,710.0 points, while the broader All Ordinaries index was 61.0 points higher, or 1.29 per cent, at 4,780.6 points. On the ASX24 the December share price index contract was 71 points higher at 4,720 points, with 34,523 contracts traded.

The operator of Australia's stock exchange, ASX, entered into an agreement to merge with the Singapore Stock Exchange (SGX) on Monday, to create the second-largest exchange in the Asia Pacific region. Under the $8.4 billion plan, SGX will buy all the shares in ASX through a scheme of arrangement, paying $22 cash and 3.473 new SGX shares for each ASX share. ASX shares traded last at $34.96 before entering a trading halt on Friday, but when it resumed trading on Monday afternoon following the announcement, shares soared by 25 per cent, peaking at $43.89. ASX closed up $6.79, or 19.42 per cent, at $41.75.

The big four banks also finished stronger. CBA was up 45 cents, or 0.89 per cent, at $50.95, Westpac rose 52 cents, or 2.32 per cent, to $22.95, and NAB climbed 53 cents, or 2.17 per cent, at $25.01. ANZ was up 49 cents, or 2.09 per cent, at $23.90 after being granted approval by the Reserve Bank of India (RBI) for a foreign banking licence, allowing the firm to open a branch in Mumbai during the first half of 2011. NAB and ANZ will release their annual profit reports this week, while Westpac will release theirs next week. CBA will hold it's annual general meeting tomorrow, Tuesday.

The miners also closed higher. BHP closed 14 cents higher, up 0.34 per cent, at $41.74. Rio Tinto finished up $2.05, or 2.5 per cent, at $84.10, after credit agency Moody's upgraded the debt rating of the miner. Fortescue Metals was up 16 cents, or 2.5 per cent, at $6.55. Meanwhile, miner Equinox Minerals announced a friendly $1.25 billion takeover of Citadel Resource Group Ltd, to take control of a Saudi Arabian copper project. In a statement, Equinox said it was offering Citadel shareholders one Equinox share for every 14.3 Citadel shares, plus 10.5 cents per Citadel share. Shares in Equinox finished up 18 cents, or 3.12 per cent, at $5.95, while Citadel was up eight cents, or 18.82 per cent, at 50.5 cents. The spot price of gold in Sydney was $1,339.30 per fine ounce, up $US11.30 from Friday's local close of $1,328.00. Gold miner Newcrest Mining ended up 62 cents, or 1.55 per cent, at $40.62.

At the close on the S&P/ASX 20, nine companies were up for every one that was down. The best performer was Macquarie Group, which ended up $1.38, or 4.11 per cent, at $34.97. In market news on Monday, wealth manager Perpetual says a takeover offer from US private equity firm Kohlberg Kravis Roberts (KKR) does not reflect Perpetual's value. But Perpetual said it would engage in talks with KKR to see whether a workable bid can be developed, and to discover KKR's intentions for the business. Shares in Perpetual closed up 23 cents at $37.90.

Meanwhile, Santos Ltd says it has signed an agreement to supply gas to its newly approved Gladstone Liquefied Natural Gas (GLNG) plant in Queensland. Santos said the deal involved supplying gas over 15 years from 2014, mainly from Santos's uncontracted Cooper Basin P2 reserves. Santos has a 66.6 per cent stake in the Cooper Basin JV, while Beach Energy holds 20.21 per cent and Origin Energy has 13.19 per cent. Shares in Santos ended up 32 cents, or 2.56 per cent, at $12.82, Beach Energy was up 4.5 cents, or 7.38 per cent, at $6.55, and Origin closed up 34 cents, or 2.14 per cent, at $16.26.

Leighton Holdings says it will apply to the Takeovers Panel for orders to protect the interests of minority shareholders should Spanish suitor ACS succeed in its takeover of Leighton's German parent Hochtief AG. Leighton shares ended up $1.07 cents, or 2.89 per cent, at $38.11. Gambling giant Tabcorp Holdings Ltd has called upon the federal government to establish a national regime governing funding and taxation for the thoroughbred racing industry. Tabcorp closed up two cents at $7.47. The top traded stock by volume was Rox Resources, with 171.51 million shares worth $16.18 million changing hands. Rox Resources finished 5.3 cents higher, or 79.1 per cent, at 12.0 cents. Preliminary market turnover was 2.83 billion shares worth $5.40 billion, with 742 stocks up, 417 down and 348 unchanged.

The Australian dollar pushed sharply higher in Asia Monday after an upbeat speech by the central bank governor and stronger than expected producer prices supported expectations consumer inflation due Wednesday may be high enough to prompt more policy tightening. The high yield currency gained early in the session after the Group of 20 industrial and emerging economies struck agreement at its weekend meeting in South Korea on a need to avoid competitive devaluation of their currencies and push toward market based exchange rate systems, a deal which traders interpreted as positive for risk sentiment.

A takeover bid for Australia's stock exchange operator also supported the local unit. Singapore Exchange Ltd. said it is offering $8.4 billion for all of ASX Ltd. From here, the focus is squarely on Wednesday's domestic inflation numbers which will be key for whether the Reserve Bank of Australia seeks to tighten at next week's meeting. It has left its overnight target steady at 4.50% since May. A Dow Jones Newswires poll of 17 economists shows a median forecast for Australian core inflation at 0.7% on quarter and 2.6% on year. The Australian dollar traded at $0.9941, up from $0.9833 late Friday, and traded at Y80.505 up from Y79.79.