Australian stocks rise most in eight weeks after softer than forecast inflation

By Reuters News

By Kumar Tanishk

Sept 30 (Reuters) - Australian equities posted their best session in eight weeks on Wednesday, as softer-than-expected inflation data prompted markets to pare bets on another near term interest rate hike.

Data showed the trimmed-mean measure of core inflation rose 0.2% in August, below forecasts for a 0.3% increase, while the annual pace held at 3.6%.

The softer print helped the S&P/ASX 200 index .AXJO close 0.9% higher at 8,789.30 points after choppy morning trade, marking its best session since August 4. The benchmark is down 3.2% this month, snapping a five-month winning streak.

"Today's data was a slight positive that maybe rate hikes are over, but it definitely wasn't conclusive," said Matthew Kidman, CIO at Centennial Asset Management.

Inflation remains above the Reserve Bank of Australia's target band, and persistent price pressures drove the central bank to raise interest rates to a 15-year high on Tuesday.

"There's got to be more evidence that the inflation numbers are coming back down," Kidman said, adding that the September-quarter inflation reading would be more meaningful than one month of data.

The latest inflation release pushed the market pricing-based implied probability of another November rate hike to 20%, from 36% before the data. 0#AUDIRPR

On the bourse, financials .AXFJ rose 0.3% with the country's top lender Commonwealth Bank of Australia CBA.AX rising 0.5%.

Miners .AXMM advanced 0.6% on firmer iron ore prices. The subindex has slipped 7.4% this month. IRONORE/

Northern Star Resources NST.AX climbed 6.4% after Morningstar expected a higher takeover bid, helping gold stocks .AXGD gain 1.4%.

Property stocks .AXRE climbed 3.7%, notching their best session since April 8. The subindex has lost 2% for the month.

Kidman said the real estate sector could continue to outperform if the latest hike proves to be the last of the cycle.

New Zealand's S&P/NZX 50 index .NZ50 advanced 1.1% to 13,834.39 points. The benchmark posted its worst month since March.

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