Australian stocks jump after oil output deal

The sharemarket has surged after a surprise deal by leading oil producers to cut production.

The sharemarket was lifted by a spike in oil prices.

The share market has hit its highest level in a month as energy and mining stocks rally after an unexpected announcement from leading oil producers that they will cut production.

At noon the benchmark S & P/ASX 200 index was up 0.85 per cent at 5,458.4 points, its highest level since August 31.

The broader All Ordinaries index was up 46.4 points, or 0.84 per cent, at 5,546.6 points.

Oil prices have jumped almost six per cent after OPEC struck a deal to limit crude output for the first time since 2008.

Woodside Petroleum shares were up 6.4 per cent, Santos had climbed almost eight per cent and Oil Search was more than seven per cent stronger.

BHP Billiton had gained 3.8 per cent, Rio Tinto was up 2.6 per cent and Fortescue Metals was 3.25 per cent higher.

The supply move took many by surprise, although CMC Markets chief market strategist Michael McCarthy warned earlier it may not be all it’s cracked up to be.

“While subeditors reached for the hyperbole generator, more cynical traders pointed out the complete lack of detail, including the potentially problematic question of which nations will curtail production,” he said.

“A 6 per cent jump in crude prices makes a nice headline, but is within normal bounds for the currently highly volatile energy markets.

“Although this rally may quickly fade, energy stocks are likely to receive a boost at this morning’s opening.”