Australian shares end meekly, underperforming regional markets which soared after the European Central Bank announced a bond-buying program aimed at tackling the eurozone debt crisis head-on.

5.29pm: That's it for today, and this week. Thanks everyone for reading this blog and posting your comments.

Here's our evening wrap of today's session.

Have a sunny weekend!

5.26pm: European shares are extending gains in early trade, continuing to draw support from the European Central Bank's bond buying plan unveiled the previous session and with investors betting on an improvement in US jobs data due later.

Sentiment also improved after German exports unexpectedly edged up in July, while China gave the green light for 60 infrastructure projects this week to give a boost to the economy.

The Euro Stoxx 50index is up 0.7 per cent, Germany's Dax has risen 0.4 per cent, France's CAC-40 is up 0.6 per cent and Spains Ibex-35 has added 1 per cent.

"I am positive on the market in the near term. You have got the policy response coming through, valuations are still OK and the macroeconomic backdrop isn't all that bad. These three things add to the momentum in the market," Graham Bishop, equity strategist at Exane BNP Paribas, says.

5.12pm: Late one on Qantas: ratings agency Standard & Poor's has lowered the airline's ratings to 'BBB-', bringing it one step closer to junk bond status.

"The downgrade is driven by our view of Qantas' weakening business risk profile, which is due to the structural pressures affecting the airline's international business," S&P says.

"Passenger capacity has increased significantly, in particular on Asian and European routes, and Qantas' peers continue to have competitive cost bases. These persistent pressures have eroded Qantas' market share and inflicted losses on the airline's international operations in the past few years.

"In addition, high fuel costs and a weak global economy have exacerbated the impact."

4.41pm: Here's how some of the blue chips performed:

  • BHP: +2%
  • Rio: +4.4%
  • ANZ: -0.2%
  • CBA: -0.2%
  • NAB: -0.2%
  • Westpac: -0.8%
  • Fortescue: +11.5% (but down 6.5% for the week)
  • Woolies: -1%
  • Telstra: -0.8%
  • Qantas +5% (adding to yesterday's 6.7%)

4.32pm: The materials sector was by far the best-performing sector today, rising 2.4 per cent, outweighing losses in financials (-0.3%) and consumer staples (-0.8%).

4.21pm: The local market managed to eke out a gain of 0.2 per cent for the week, the first rise in three weeks,  despite it being a week in which iron ore miners took a bit of a beating.

Still, not the bang investors were hoping for after the ECB brought out its big bazooka.

4.17pm: Local gains were pretty small in comparison to other regional sharemarkets:

  • Japan (Nikkei): +2.1%
  • Hong Kong: +2.5%
  • Shanghai: +3.7%
  • Taiwan: +1.3%
  • Korea: +2.5%
  • India: +1.7%
  • Singapore: +0.9%
  • New Zealand: +0.8%

4.14pm: The market has closed slightly higher, in a fairly quiet end to a turbulent week. The benchmark S&P/ASX200 index rose 12.9 points, or 0.3 per cent, to 4325.8, while the broader All Ords gained 17.2 points, or 0.4 per cent, to 4348.8.

3.38pm: Looking at the reaction of risk assets the market is clearly buying the pro-active message that the ECB is selling, CMC Markets trader Tim Waterer says:

  • With (ECB president Mario) Draghi coming up trumps in the minds of traders, the pressure valve was released on higher yielding assets on hopes that bond buying from the central bank will avert further crisis’ from unfolding in the region.
  • The Australian sharemarket was quite enthused in the early going following the positive events abroad, however gains were tempered in the afternoon with traders adopting a ‘proceed with caution’ approach in the lead up to the US employment report tonight.
  • The likes of BHP and Rio surged on hopes that the ECB bond buying plan will provide a ‘shot in the arm’ to commodities demand over coming quarters by instilling a sense of confidence to markets.
  • Today’s Non-Farm Payrolls in the US will set the tone for financial markets with the result likely to dictate if the ECB-inspired rally has further to run. Expectations are growing that we could see a number nudging 200k of jobs growth following on from the ADP figure.
  • However, the real test of market nerves would come if we saw a result of below 100k, as this could spark a ‘bad news is good news’ outlook in relation to QE3.

3.22pm: The price of the yellow metal continues to spiral upwards, seemingly endlessly, Motley Fool's Scott Phillips writes in Why gold could be next to fall:

Even some of the most diehard gold bears are giving up and joining the party, figuring that joining the bulls is easier than trying to beat them.

I don't know if or when the gold bubble will end. The party will continue for as long as someone keeps pouring the drinks.

But when the drinks suddenly run out – because investors become less fearful of equities or because gold mining output increases to soak up the demand – prices are likely to fall.

2.53pm: Fortescue is in a bit of a relief rally, up 7.4 per cent, but there are still lots of investors around willing to bet on a falling share price: the percentage of Fortescue stocks shorted has edged up steadily over the week and was last at 17.4 per cent, according to the latest available data.

2.49pm: Here's Michael Pascoe's video take on this week:

Please turn off the auto-refresh at the top of the page before playing this video.

2.43pm: In the third outage at a major bank this week, ANZ has confirmed that 5000 large corporate client users of its online cash management service could not view their balances in the past two days.

The error with its ANZ ransactive system was blamed on a "technical glitch" that prevented customers from seeing their accounts or conducting transactions on the platform.

ANZ was forced to provide balances to customers through phone services or other means, it said. "At no point did it impact customers' ability to transact on their accounts," said a spokesman for the bank.

Yet as of Friday afternoon the issue was only "95 per cent" resolved, ANZ said, with offshore currency accounts still to be restored.

National Australia Bank's internet banking system was offline for hours on Wednesday, frustrating customers who could not access their accounts. Also this week, CBA-backed CommSec said up to 9000 clients may have had their share dividends diverted to the wrong accounts.

2.38pm: China’s stocks are surging, driving the benchmark index up the most in almost three years, as a government plan to build more roads fuelled speculation policy makers will introduce more economic stimulus measures.

The Shanghai Composite Index was recently up 4.2 per cent, poised for the biggest advance since October 9, 2009. The gauge climbed 4.4 per cent this week, the most since October.

‘‘The road and railway spending is similar to the large stimulus plan that China had in the last financial crisis,’’ says Wei Wei, an analyst at West China Securities in Shanghai. ‘‘It seems the government is rolling out more measures. There’s also speculation of more cuts to the reserve ratio requirement cut this weekend.’’

The announcements this week come as the government seeks to bolster growth that eased to the slowest pace in three years in the second quarter.

2.24pm: Asia-Pacific nations have made a breakthrough in promoting trade in 'green' technology, and the United States is pressing ahead with efforts to carve out a regional free-trade zone, a senior US official said on today.

Speaking before a summit of leaders of the 21-member Asia-Pacific Economic Cooperation (APEC), Deputy US Trade Representative Demetrios Marantis said the group had agreed to slash import duties on technologies that can promote economic growth without endangering the environment.

"This is really a significant achievement, in that it shows how APEC can lead," Marantis told Reuters in an interview after ministers finished their preparations for the summit on Saturday and Sunday in the Russian Pacific port of Vladivostok.

"It allows us to accomplish the twin goals of liberalising trade and green growth."

Ministers agreed on a list of 54 green technologies that will be subject to import duties of 5 per cent or less from 2015, following through on a commitment made by leaders at the last APEC summit in Honolulu a year ago.

2.16pm: BusinessDay's Michael Pascoe has filed: The boom that keeps on giving.

China built Australia last year — 1.9 billion square metres of residential floor space. Actually, that's not quite true — the total floor space of all of Australia's housing isn't quite that big.In the previous 15 years, China pretty much built Europe as 300 million people or so moved from the farms and villages into cities.

And the really neat thing is that they're going to do it again in the next 20 years, plus the quality of the buildings and the floor space per person are likely to improve, which means they're going to be buying a lot more iron ore and coking coal. Yes, Twiggy, Gina and Marius, there is a Santa Claus and he speaks Mandarin.

At this stage the China bears inevitably start growling about bubbles and over-building and ghost cities and empty luxury unit towers and, as usual, they're a little bit right but mostly wrong.

2.03pm: It looks like Australian rare earths miner Lynas has one more hurdle to climb before it can make its Malaysian refinery fully operational.

“They will still need to apply for import license to bring in the raw material to Malaysia. Till today, we have not received their application,’’ said Raja Abdul Aziz Raja Adnan, director-general of Malaysia’s Atomic Energy Licensing Board.

“The temporary operating license is not a blank check that allows them to import the raw material. Lynas will be allowed to do a dry run at the production plant with the license approval under AELB supervision. A full commissioning of the Lynas plant can only be done when the raw material is brought in after the import license approval.”

1.52pm: Treasurer Wayne Swan has applauded the European Central Bank’s plan for a massive European sovereign bond buy-up to stabilise markets as another step to putting the zone on a sustainable footing.

The ECB chief Mario Draghi finally overcame German opposition on Thursday to unleash what has been described as the ‘‘big bazooka’’ against Europe’s debt crisis.

‘‘We will do whatever it takes’’ to keep the eurozone together, Draghi said, stressing that ‘‘unfounded fears are just what they are, unfounded’’.

Swan said these were encouraging developments.

‘‘However, it’s vital that Europe’s political leaders use this window of opportunity to take decisive action to stabilise the path of Europe’s troubled economies."

1.34pm: Gold is at an important crossroads, having briefly broken through $US1700 yesterday, says Steven Dooley, head of research for ForexCT, adding that all eyes will be on the US non-farm payroll announcement tonight for signs of whether the precious metal will consolidate or pull back.

  • We’ve been waiting a while for gold to break above that resistance level, and it happened last night in the lead-up to the ECB decision.
  • US non-farm payrolls will be crucial for gold. The US Federal Reserve has reiterated on many occasions that the US jobs market will be the key determinant for another round of QE (or other stimulus).
  • A low jobs number will be positive for gold, but a strong result could see gold pull back to levels as low at $US1680.

Gold is currently trading at $US1690.

1.25pm: Markets around the region are all posting healthy gains:

  • Japan (Nikkei): +1.75%
  • Hong Kong: +2.2%
  • SHanghai: +2.8%
  • Taiwan: +1.3%
  • Korea: +2%
  • Singapore: +0.7%
  • New Zealand: +0.9%

"I think it's the relief rally that a lot of people have been looking for," says Simon Twiss, partner at Arnhem Investment Management. "People are looking for those macro headlines and they got confirmation last night."

1.14pm: The recent plunge in prices for iron ore is likely to take a bigger chunk out of earnings from August onwards, analysts say.

Since iron ore exports had been running at over $60 billion a year, the recent fall in the iron ore price by about one-third if sustained would threaten to cut earnings by perhaps $20 billion. That in turn could crimp mining profits, dividends, wages and government tax receipts.

"The broad picture emerging from the Asia-Pacific trade data for July suggests that external demand started Q3 on the back foot," says Michael Turner, a strategist at RBC Capital Markets.

"The weakness in spot iron ore prices is testament to this and our forecasts involve external demand detracting from growth in the second half."

12.55pm: The dollar has shrugged off the weaker-than-expected trade data to hold on to a half-a-US-cent gain made in the wake of the ECB's announcement on its eurozone bond buying program.

The dollar is currently trading at $US1.0298.

ANZ foreign exchange strategist Andrew Salter says the move should provide a boost for eurozone economies, which was good news for China - Australia’s biggest trading partner.

‘‘China has around 40 per cent of its exports directed to the eurozone,’’ he says. ‘‘So, if things pick up in Europe, growth and activity should improve in China and that should be a positive for Australia.’’

12.32pm: Quite some optimism among blog readers this morning, with more than 60 per cent of respondents to our poll saying the ASX200 will close more than 1 per cent higher.

Unfortunately at the moment the market is heading in the other direction, having trimmed about half its early gains, with falls in the big banks weighing on the benchmark index.

12.21pm: Another poor economic number (apologies for the slightly delayed delivery):

Australia’s construction sector has now contracted for 27 straight months and recorded its sharpest decline in a year, despite recent interest rates.

The Australian Industry Group (Ai Group) performance of construction index showed activity in the sector in August fell to 32.2 per cent, from July’s 36.6 per cent. A reading below 50 indicates a contraction in the industry.

It is the 27th straight month the index has recorded a contraction and the August result is the weakest since September last year.

Apartment building was the weakest performing sub sector, down 10.8 points to 22.1, while engineering construction was the strongest at 35.7 points, despite a 3.8 point decline.

Ai Group director of public policy, Peter Burn, said recent interest rate cuts had not provided the hoped-for boost for the sector.

12.18pm: US cosmetics giant MAC has discovered that counterfeit make-up using its iconic branding was being sold across Target stores in Australia and has pushed the retailer to remove the product from its shelves.

In a statement just released on its international website, MAC said it had used lab testing to detect the fake cosmetics.

‘‘M·A·C Cosmetics has conducted extensive testing in our US laboratories and found that M·A·C marked products that were, until recently, being sold at Target Australia are counterfeit,’’ a notice on its site says. ‘‘We notified Target Australia and they have withdrawn the products from their shelves and website.’’

12.03pm: Coal baron Nathan Tinkler has received another blow, with confirmation that developer Mirvac will seek to enforce orders in the NSW Supreme Court against two of his private companies.

Earlier this year the court ordered the two Tinkler companies, Ocean Street Holdings and guarantor Buildev Group, to complete the purchase of an industrial site in Newcastle, as agreed in July 2011.

The agreed purchase price was $14 million and the site was to be used as part of Mr Tinkler's proposed new coal terminal, which the NSW Government rejected in January.

Ocean Street did not go ahead with the purchase and Mirvac sued in the Supreme Court, which ordered Ocean Street and Buildev to pay about $17 million including interest, by September 1.

11.51am: The dollar hardly reacted to the trade figures and is still trading slightly below $US1.03, at $US1.0289.

11.45am: Some more details on the trade deficit:

Exports fell 3 per cent to $25.8 billion, led by a 25 per cent drop in non-monetary gold and a 3 per cent decline in metal ores and minerals, today’s report showed.

Imports slipped 1 per cent to $26.3 billion on an 18 per cent drop in industrial transport equipment, the report showed.

11.35am: That trade figure is the biggest since March after turning negative at the start of the year, despite a small surplus in April.

11.34am: Australia’s trade deficit widened in July, the Australian Bureau of Statistics (ABS) said today.

The balance on goods and services was a deficit of $556 million in July seasonally adjusted, compared with a deficit of $227 million in June.

Economists’ forecasts had centred on a deficit of $300 million in July.During July, exports were down 3.0 per cent, while imports were down 1.0 per cent, the ABS said on Friday.

11.19am: The ASX is back to where it started - about half a per cent higher. The big banks are having a mixed day:

  • CBA is 0.16% lower to $54.63
  • ANZ is 0.43% higher to $24.315
  • NAB is 0.12% higher to $25.14
  • Westpac is 0.42% lower to $23.80

11.07am: Following the revised offer from News Corp, Consolidated Media shares are 0.6 per cent lower, or 2 cents, to $3.42. The new offer is for $3.45 a shares plus a six cent dividend for a total of $3.51 per share.

11.04am: Stocks have given up some of the early gains. Both the All Ords and the ASX200 are back to a gain of 0.7 per cent, down from about 1 per cent shortly after markets opened.

10.53am: Bell Potter senior adviser Stuart Smith said the positive news from offshore markets had provided the catalyst for investors to have enough conviction to buy.

"It’s an overdue surge of confidence. It’s been gradually coming to the surface," Mr Smith said.

Mr Smith said investors would be focused on the release of the US non-farm payrolls report - a key employment indicator in the world’s largest economy - due out later on Friday (AEST).

10.48am: News Ltd has made a formal offer for James Packer’s Consolidated Media, but it’s lower than its original bid. In a binding proposal made by News, the Rupert Murdoch-controlled company has offered $3.45 for each ConsMedia share, less than the $3.50 it offered in an indicative bid in June.

The binding proposal values ConsMedia at $1.94 billion. ConsMedia owns a 50 per cent stake in Fox Sports and 25 per cent of Foxtel.

If the offer is successful, News will take control of Fox Sports and own half of Foxtel. ConsMedia directors would unanimously recommend the offer to the company’s shareholders, executive chairman James Packer said.

10.43am: Unsurprisingly, bonds are being sold off today, with the yield on the 10-year government bond rising to 3.2 per cent, from 3.1 per cent. Bond prices and yields move in opposite direction.

10.40am: The retailers - apart from Myer - are also enjoying a strong end to the week:

  • Woolworths: +0.95%
  • Wesfarmers: +0.34%
  • David Jones: +2.07%
  • Myer: -0.53%
  • Harvey Norman: unchanged

10.35am: BREAKING Optus has been denied leave to appeal its TV Now case in the High Court. This ends the legal battle against the Australian Football League (AFL) the National Rugby League (NRL) and Telstra.

The sporting bodies and Telstra took Optus to court arguing that TV Now breached their exclusive rights deals because Optus customers could record and watch matches screened on free-to-air television in near live conditions on mobile and internet devices. Telstra has exclusive internet broadcast rights for the AFL until 2016 and for NRL until the end of this year.

Optus stopped the TV Now service when it lost the Federal Court case and is now unlikely to resume the service. Here's some background. 

10.30am: Here are the leading mining and resources companies on the materials sub index of the ASX200:

  • Fortescue: +5.72%
  • Gryphon: +5.38%
  • Discovery Metals: +4.86%
  • Arrium: +4.39%
  • Independence Group: +4.38%
  • Atlas Iron: +4.09%

10.24am: The materials sub indices is burst out of the blocks this morning, as those returns from the big miners would suggest. Here's how the various sub indices on the ASX200 are performing:

  • Materials: +1.90%
  • Industrials: +1.67%
  • Consumer disc.: +.96%
  • Consumer staples: +0.81%
  • Financials: +0.7%

10.21am: IG Markets analyst Stan Shamu there was little surprise that resources stocks were leading the market higher today after the announcement from the European Central Bank.

‘‘We are likely to see a massively risk-on session today with a recovery in the cyclical space driving gains into the end of the week," he said.

"This will see 4400 firmly in sight for the local market, and traders will be eyeing this level after the market faltered there in August.

"Iron ore’s losing streak finally came to a halt and this might lift the iron ore miners today.’’ The price of iron ore closed at $US87 per tonne yesterday, rising slightly from $US86.70. 

10.16am: After posting strong gains in the US overnight, the other big miners have joined Fortescue to post a strong early gain: 

  • BHP is 1.79% higher to $31.90
  • Rio is 3.33% higher to $51.83

10.14am: The benchmark S&P/ASX200 index is up 45.4 points, or 1.05 per cent, at 4358.3, while the broader All Ordinaries index was up 45.2 points, or 1.04 per cent, at 4376.8.

On the ASX 24, the September share price index futures contract was up 39  points at 4,356, with 10,030 contracts traded.

10.09am: Fortescue have benefited from the ECB moves, as have other miners and mining services companies. It's shares are up as much as 16 cents or 5.4 per cent to $3.13. There's a long way to go but that puts FMG on course for its best day in five weeks.

10.05am: Early take - shares up 0.7 per cent as the market opens.

9.53am: The big miners had a strong night in US trade. Rio added 5.1 per cent and BHP added 2.79 per cent as the China iron ore price posted a modest gain - up 30 US cents to $US87.

9.51am: AMP trades ex dividend today. Here are some analyst rating changes:

  • Charter Hall Group cut to 'neutral' at Citigroup
  • Billabong raised to 'neutral' from 'underweight' at JPMorgan 
  • GPT Group cut to 'underperform' at Credit Suisse

9.47am: The first piece of today's econoics data is out. Australia’s construction sector has now contracted for 27 straight months and recorded its sharpest decline in a year.

The Australian Industry Group performance of construction index, released today, shows activity in the sector last month fell to 32.2 per cent, from July’s 36.6 per cent. A reading below 50 indicates a contraction in the industry. The August result is the weakest since September last year.

9.42am:  Here are a few more lines of explanation from an ANZ note this morning on the ECB announcement:

The stated aim of today’s policy announcement is to “repair” the monetary transmission mechanism within the euro zone (EZ) and to provide a “backstop” for pressured economies. Importantly, the design of the program maintains the pressure on national governments to continue to pursue fiscal consolidation and structural reforms (subject to the ECB’s discretion).

9.39am Markets rose sharply after the ECB announcement. In the US, the S&P500 closed at its highest level since May 2008, before the financial crisis began to gather steam. Markets in Italy and Spain, where some of the ECB's bond buying will be targeted, responded with gains of more than 4 per cent. Here's where the major offshore indices closed:

In the US:

  • S&P 500 added 2.04% at 1432.12
  • Dow Jones indus average added 1.87% to 13,292.00
  • Nasdaq Composite Index added 2.12% at 3134.39

In Europe:

  • London's FTSE 100 added 2.11% to 5777.34
  • In Frankfurt the DAX 30 added 2.91% to 7167.33
  • In Paris the CAC 40 added 3.06% to 3509.88

9.35am: ECB president Mario Draghi received the stock market equivalent of a standing ovation after delivering a plan for a massive sovereign debt buy up despite German opposition to the plan. 

As we report here, Draghi's masterplan is designed to bring down the soaring borrowing costs that crisis-wracked countries say prevent them from getting back on their feet. In effect, the ECB will buy the debt - or bonds - of struggling governments, helping to keep their borrowing costs at manageable levels while giving them the funds they need to operate.

Draghi's new revamped programme to buy bonds issued by heavily indebted eurozone countries - a scheme named "Outright Monetary Transactions."

The OMTs will replace the ECB's previous Securities Market Programme or SMP, first launched in May 2010. The SMP has come under heavy fire, particularly in Germany. Its critics say it blurs the lines between monetary policy, which is supposed to be free from all political influence in the euro area, and fiscal policy. Full story here.

9.32am: Australian investors are expected to follow the lead of their global counterparts to drive the Australian sharemarket to a day of solid, if not spectacular, gains. More on the reasons why shortly.

For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:

  • The SPI was 52 points higher at 4369
  • The $A was trading at $US1.028
  • In the US, the S&P500 added 2.04% to 1432.12
     
  • In Europe, the FTSE100 added 2.11% to 5777.34
     
  • China iron ore added 30 US cents to $US87 a metric tonne 
  • Gold added 0.7% to $US1705.60 an ounce
     
  • WTI crude oil added 17 US cents to $US95.53 a barrel
     
  • RJ/CRB commodities index added 0.2% to 308.89

9.30am: Good morning folks. Welcome to the Markets Live blog for Friday.

This blog is not intended as investment advice

BusinessDay with agencies