The Australian share market finished modestly higher after Asian markets rallied and as weaker than expected local wage data buoyed consumer stocks. The benchmark S&P/ASX200 index was 9.8 points higher at 4,693.7, while the broader All Ordinaries index was up 12.3 points at 4,765.3.

On the ASX 24, the June share price index futures contract was 15 points higher at 4,703, with 29,397 contracts traded. Interest rate sensitive consumer stocks were the winners, with consumer staples Woolworths and Wesfarmers owner of Coles supermarkets tracking higher.

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Woolworths gained 12 cents to $27.29, while Wesfarmers added 40 cents, or 1.21 per cent, to $33.39. Talk that Graincorp Ltd could be a takeover target sent the company's shares soaring 41 cents, or 5.37 per cent, to $8.05. Measures announced in the federal budget were supportive of rural Australia and Graincorp, Elders and Nufarm are in the spotlight as beneficiaries and potential takeover targets. Telstra was a major driver of the market's overall gains. The telco jumped one per cent and finished two cents or 0.67 per cent higher at $3.02.

Market heavyweight BHP Billiton firmed 14 cents to $44.29. Rival Rio Tinto slipped 19 cents to $80.06 after it said it had priced $US2 billion of fixed rate bonds. Banks reversed course late in the trading session, giving up their gains after global ratings agency Moody's downgraded the big four banks and Commonwealth Bank's subsidiary, BankWest, by one notch to AA2 with a stable outlook. The downgrade was primarily due to the banks' heavy reliance on offshore wholesale funding markets, Moody's said. Westpac Banking Corporation fell two cents to $22.81 and Commonwealth Bank lost nine cents to $51.80. Their southern rivals also lost ground on earlier gains, but still finished in positive territory on the day. National Australia Bank firmed two cents to $26.93 and ANZ Banking Group added 20 cents to $22.69.

Regional pay-tv provider Austar jumped 7.5 cents, or 6.12 per cent, to $1.30 after it confirmed reports that it has entered exploratory talks with Foxtel that may result in a takeover offer from the bigger peer. Fairfax Media surged 4.5 cents, or 4.33 per cent, to $1.085 as investors continued buying after the media group on Tuesday said it was considering selling its radio assets. Cement and lime manufacturer Adelaide Brighton says it expects full year profit to be in line with 2010, despite a weaker first half due to maintenance shut-downs and a loss of contracted cement volume in Western Australia. Adelaide Brighton's shares firmed one cent to $3.10. National turnover reached 2.2 billion shares, worth $4.5 billion, with 539 stocks trading up, 572 down and 384 unchanged.

Brushing off a ratings downgrade by Moody's of the nations four biggest banks, the Australian dollar ended higher Wednesday largely on a better risk tone, some of which was due to signs of an easing in worries over Europe's debt crisis. Moody's lowered Westpac Bank, Australia and New Zealand Banking Group, National Australia Bank and Commonwealth Bank of Australia to Aa2 from Aa1 citing their dependence on offshore funding markets. The Australian dollar was changing hands at $1.0623 from $1.0650 before Moody's announcement and up from $1.0604 late Tuesday.

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