Australian shares edge higher as CSL deal lifts healthcare stocks

By Jasmeen Ara Islam Shaikh

Oct 5 (Reuters) - Australian shares closed slightly higher on Monday, with a rally in biopharmaceutical giant CSL boosting healthcare stocks in thin holiday trade.

The benchmark S&P/ASX 200 index .AXJO closed 0.1% higher at 8,686.40 points, after rising as much as 0.6% earlier in the session. The index had gained 0.8% on Friday. Several Australian states were closed on Monday for a public holiday.

Globally, investors scaled back bets on a Federal Reserve rate hike this month after softer-than-expected US jobs data on Friday, though uncertainty over the inflation outlook kept the prospect of further tightening alive.

At home, the Reserve Bank of Australia last week raised rates to a 15-year high of 4.6%, citing persistent inflation and signalling it remained open to additional tightening if needed.

"With the cash rate now more clearly in restrictive territory and some signs the economy has slowed, each further incremental increase in rates is now a tougher call," analysts at NAB said in a note.

"Inflation remains well above target and cost pressures remain elevated, but the outlook for the labour market (and activity) will become increasingly important."

The benchmark 10-year yield rose 1 basis point to 5.346%, as inflation concerns continued to weigh on bonds.

Healthcare stocks .AXHJ rose 0.7% in their best session in a week. CSL CSL.AX climbed 0.9% after agreeing to a deal worth up to $1.6 billion with Swiss biotech Alentis Therapeutics to co-develop and co-promote treatments for rare kidney and liver diseases.

Miners .AXMM ended up 0.4%, helped by strength in iron ore and copper prices. Rio Tinto RIO.AX and BHP BHP.AX gained 0.7% and 1.1%, respectively. IRONORE/ MET/L

Consumer discretionary .AXDJ and staple stocks .AXSJ slipped 0.9% and 0.4%, respectively, while real estate stocks .AXRE fell for a third consecutive session, ending 0.4% lower.

Across the Tasman Sea, the New Zealand benchmark S&P/NZX 50 index .NZ50 ended up 0.1% at 13,699.02 points.