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Australia shares hit 14-month high on rate cut, weaker A$

Tuesday, 2 Oct 2012 | 10:04 PM ET

MELBOURNE, Oct 3 (Reuters) - Australian shares hit a 14 month-high on Wednesday as banks and broader stocks surged after the central bank cut interest rates and the local dollar weakened, enhancing export earnings.

The benchmark S&P/ASX 200 index

pushed through May highs to hit a peak of 4,448.5, its highest since August 2, 2011, but later unwound some of its gains to be up 8 points at 4,441.3 by 0200 GMT.

Top banks were all higher, led by National Australia Bank

with a gain of 0.8 percent to A$26.01.

"People are rethinking everything," said Macquarie Equities division director Lucinda Chan.

"We were lagging other markets. We've been a little bit wishy-washy here and haven't really done much, so the market's just saying 'Okay, we've had a rate cut now, and hey, around 7 percent growth in China aint that bad.' And the currency dropping back is always a help in this market," she said.

The Australian dollar retreated to a one-month low after the rate cut, and as Spain said a request for European aid was not imminent, denying a report Madrid could apply for help as soon as this weekend.

.

Still, activity was light and investors said price moves could be choppy.

"It's hard to predict. Don't read too much into it. Take it for what it is," said Chan.

"The market's running on low volumes so that's why prices get pushed sometimes," she said.

New Zealand's benchmark NZX 50 index

rose 0.3 percent to 3,883.6 points. STOCKS ON THE MOVE: * APN News & Media Limited

rallied as much as 20 percent to NZ$0.54 after it confirmed a strategic review of its New Zealand assets was ongoing.

0131 GMT * Bionic ear maker Cochlear Ltd

rose 0.9 percent to A$69.28 after the Australian Financial Review said it won a A$100 million contract with the Chinese government earlier this year. The company is currently bidding for a five-year contract worth A$600 million.

0131 GMT * Boart Longyear

fell 0.6 percent to A$1.65 after it said in a stock exchange filing that CEO Craig Kipp was leaving and a search was underway to replace him.

0100 GMT

(Reporting by Miranda Maxwell; Editing by Eric Meijer)

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