Share market closes higher as Reserve Bank warns property market putting financial system at risk

The Reserve Bank has emphasised the risks that the property market poses to Australia's financial system in its latest financial stability review.

The central bank has also warned the big banks to be vigilant in maintaining lending standards.

The RBA has revealed lending standards for home loans have been looser than first thought, adding to the risks of an eventual downturn in the housing market.

The bank has also highlighted the risks of oversupply in local property markets including Melbourne, Brisbane and Sydney, and the potential effect that could have on property developers.

Rio Tinto has reported a solid increase in its iron ore production during the third quarter.

In the three months to the end of September, Rio Tinto has produced 86.1 million tonnes of iron ore ? up 12 per cent on the same period last year.

The miner's forecasts for full-year global iron ore shipments remains unchanged at about 340 million tonnes.

The release of US data on consumer prices showed the biggest fall in eight months, as petrol prices declined in September, but an increase in core CPI, which removes food and energy costs, suggested inflation was starting to strengthen.

There were further signs of the robust US labour market too, with new claims for jobless benefits falling last week.

The Dow Jones Industrial Average closed up 1.28 per cent to 17,141, while the S&P 500 ended 1.5 per cent up at 2,023 and the Nasdaq gained 1.82 per cent to close at 4,870.

Locally the share market closed higher today but the big miners fell into the red.

BHP Billiton lost 0.5 per cent to $25.00, while Rio Tinto shed 1 per cent to $53.69 and the Commonwealth Bank finished 1.5 per cent higher at $76.55.

The All Ordinaries Index gained 0.7 per cent to 5,303 and the ASX 200 is up 38 points to 5,268.

The Australian dollar has lost ground against the greenback, currently buying 72.8 US cents.

It is also worth 63.9 euro cents, 47.04 British pence, 86.75 Japanese yen and $NZ1.06.

Shortly after 5:00pm, West Texas Crude oil had edged down to $US46.33 a barrel, the price of a barrel of Tapis had eased to $US51.45 and spot gold was lower at $US1,176.

Source: ABC News

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