The Australian share market drifted higher in quiet trading Tuesday as heavyweight mining stocks led a broad based recovery in the local bourse after it hit an eight week low on Monday. The benchmark S&P/ASX 200 closed up 33.9 points, or 0.7%, at 4683.9 after rising to 4685.4. Trading volume was well below average. Reflecting an indecisive tone, the index consolidated inside Monday's range. The short term trend remained bearish, with a bearish pennant targeting 4522.0 according to Dow Jones Newswires technical analysis. Support and resistance levels were indicated at 4576.0 and 4714.0.

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With Europe's sovereign debt problems remaining in the spotlight and recent U.S. economic data disappointing investors on Monday, global markets generally remained risk averse. However, after leading the recent decline, the Australian share market reacted positively to overnight gains in mining stocks and modest gains in China's Shanghai Composite on Tuesday. BHP Billiton rose 1.5% to $44.15, regaining its 200-day moving average at $43.70. Rio Tinto rose 1.5% to A$80.25 and OZ Minerals rose 4.0% to $1.435. But Citi cut its recommended weighting in the Australian resources sector to Underweight, arguing that commodity prices have reached a near-term limit and may retrace further.

James Hardie rose 4.1% after flagging a 5.0% on-market share buyback over the next 12 months and the resumption of dividend payments after its second-quarter results in November. Macquarie reiterated its Outperform rating and A$7.06 price target on James Hardie, saying it offers strong operational leverage to the eventual recovery in U.S. housing. Among financials, major banks rose 0.1%-0.8%, while QBE Insurance rose 1.6% to A$17.97. The energy sector shrugged off Monday's 2.3% fall in Nymex June crude oil futures, with Woodside Petroleum, Origin and Santos rising 0.5%-0.9%.

The Australian dollar was higher late Tuesday, buoyed by hawkish signals from the Reserve Bank of Australia and comments by Treasury Secretary Martin Parkinson that persistent strength in the currency can be expected over time. In minutes of its May 3 policy meeting, the Reserve Bank repeated that in all likelihood interest rates will need to rise as inflation is headed higher. The Australian dollar was changing hands at $1.0604, up from $1.0570 late Monday. Against the yen, it was at 86.285, up from 85.54.

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