SYDNEY, March 15 (Reuters) - Australian stocks shot to a record close for the third straight session on Monday, narrowing the gap to 3,000 points -- the next big psychological barrier on the bourse's key gauge.
The benchmark All Ordinaries index rose 28.2 points, or 0.95 percent, to a record 2,989.5 finish, also a new intraday high.
''There seems to be a lot of cash on the sidelines,'' said Chris Walker, head of institutional sales at Colonial Stockbroking.
''The overseas interest is coming back, our currency seems to have found a bottom, inflation is still relatively low, we've had a reasonable reporting season, and there's a lot of euphoria surrounding 10,000,'' he said of the next target on Wall Street's Dow Jones Industrial average index.
Analysts said Australia's corporate profits -- mainly for the first half to December 31 -- have beat forecasts by up to seven percent and bode well for the full year to June 30.
Brokers said gains occurred in moderate trade and fuelled anticipation over the timing of a decisive push past 3,000.
''It's a mug's game to say whether we will hit 3,000 today, tomorrow or next week, but the momentum is definitely there for 3,000 plus,'' Annette Beacher, senior economist at Salomon Smith Barney, told Reuters Financial Television.
She said the Dow's run for 10,000 would support a rising domestic index, but added Australia's fundamentals were strong enough to reach the much-watched barrier almost regardless of Wall Street.
''We have strong growth, we have very low inflation, both of those underpin very positive company earnings,'' Beacher said.
Major banks continued to defy gravity, sending the banking sector sub-index 117.9 points, or 1.71 percent, higher to 7,022.30.
''People still see safety in the banks,'' Walker said.
''It's better than bank interest (rates),'' he said.
Market heavyweight and sector leader National Australia Bank rose 33 cents, or 1.2 percent, to A$28.39, as two million shares changed hands.
Commonwealth Bank of Australia led sector gains, soaring 65 cents, or 2.5 percent, to A$26.65.
Macquarie Bank added 35 cents, or 1.9 percent, to A$18.95, up 5.6 percent from its A$17.95 finish on Wednesday, the day before it spiked nearly A$1 higher.
Brokers have said the investment bank and securities house is being powered by positive sentiment, although mild takeover talk lingers amid a rationalisation of Australia's financial industry.
''It wasn't that long ago -- only about three months or so -- they were at A$14, so people are jumping on the bandwagon,'' said Bruce Williams, client adviser at Brisbane-based Wilson HTM.
The energy sub-index rose 22.8 points, or 1.9 percent, to 1,242.2, a fourth straight trading day of gains.
Sector leader Woodside Petroleum ended 16 cents, or 1.8 percent, higher at A$9.01 as a hefty 3.3 million shares changed hands.
Brokers, noting Woodside had closed above A$9 for the first time since October 16, said the stock had been heavily oversold.
Santos zoomed 11 cents, or 2.4 percent, to A$4.69 despite a drop in calendar 1998 net profit to A$176.3 million from a previous A$206.2 million.
Brokers said the result was in line with forecasts.
They added investors were showing tentative signs of belief in a better oil price outlook after top producers agreed on Friday to cut production by more than two million barrels a day.
''People are a bit more comfortable the oil price is going to hold,'' Walker said. ---------------------FEATURES/KEY ACTIVES------------------------ *AMP A$17.91 (+.11) *Brambles Industries A$41.53 (+.37) *Lend Lease A$21.75 (+.15) *Telstra Corp A$8.80 (+.06)
Industrials broadly firmer as market touches new highs. *BHP A$12.75 (-.11)
Resources and energy giant slips after solid gains last week. *Rio Tinto A$22.19 (+.29) *WMC A$5.18 (+.10)
Miners enjoy gains despite metals' lacklustre tone on Friday.
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