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Local shares retreated from morning highs, as banks softened, however still finished firmly in the black. Energy stocks were the talk of the market, with takeover rumours and offers sending several stocks sharply higher.
 
At the close, the All Ords was up 46.2 to 4,819.6, while the ASX/200 rose 40.7 to 4,807.9. Over 2.2 billion shares worth around $4.8 billion had changed hands.

The Energy sector rallied 3.7% to start the week.

The stand out was Arrow Energy shares surging 46.8% to a record high $5.11 after the company announced it has been approached by joint bidders Royal Dutch Shell and PetroChina with a non-binding indicative and conditional proposal. Under the proposal shareholders would receive $4.45 cash per share plus a share in a new entity comprised of Arrow’s international business.

Majors Woodside and Origin gained 1.6% and 2.3% to $45.25 and $16.86.

Oil Search rallied 33c to $5.57 as the price of crude moved to over US$82 a barrel at one point on Friday, or close to 17-month highs.

Santos put on 40c, or 3% to $13.83, while coal miner New Hope climbed 9.2% to $4.87.

Eastern Star Gas rallied 9c, or 12.5% on speculation it could be the next takeover target in the rush for coal seem gas assets.

Meanwhile, Bow Energy shares spiked 27.6% after saying its gas reserves were up to 60% higher than previously thought.

BHP Billiton gained $1.01, or 2.4% to $43.51 to add 12.3 points to the index. The miner said it had struck pricing deals for much of its coking coal contracts in 2010.

Rio Tinto advanced $1.93, or 2.6% to $76.94 as UBS upgraded its target price on the stock.

The Materials and Resources sector was 2.1% higher.

Gold miners Newcrest and Lihir rose 1.1% and 1% to $34.34 and $2.94 respectively. The price of the precious metal edged 0.2% higher Friday.

Aluminium producer Alumina rallied 4.3% to $1.71.

Weakness within the big four banks and among the insurers saw the Banks and Financials sector finish just 0.1% above the line.

NAB dipped 17c to $26.33 as speculation surfaced it is considering selling or buying UK based banking businesses.

CBA was down 28c, or 0.5% to $54.82.

In the positive column, albeit just, was Westpac with an 8c, or 0.3% gain to $26.83. 

Investment bank Macquarie rose $1.49, or 3.1% to $49.55.

IAG was the worst of the insurers as the sub-sector struggled in the aftermath of severe storms that hit Melbourne and other areas in the state of Victoria over the weekend.

IAG lost 8c, or 2% to $3.98 and Suncorp-Metway shares were down 1.7% to $8.54. AMP showed strength, up 2.2% to $6.10.

It was a subdued day's trade for the Property Trust stocks. The sector gained 0.5%, with heavyweight Westfield up 2c to $12.26.

The Industrials sector was flat despite a 6c, or 0.8% drop to $7.21 from Brambles.

Leighton countered, adding 17c to $39.47.

Qantas and Virgin Blue were 0.7% and 2.2% stronger at $2.79 and 70.5c respectively.

Losses from blue chips Wesfarmers and Woolworths saw the Consumer Staples sector retreat 0.2%.

Wesfarmers reversed lunchtime gains to be down 18c, or 0.6% to $32.53, while Woolworths shed 12c, or 0.4% to $27.93.

Consumer Discretionary put on 0.7% following strength from the media players.

Ten jumped 10c, or 5.8% to $1.82, while Newscorp and Seven gained 1.5% and 3.4%.

Gamer Aristocrat rallied 2.8% to $4.35.

JB Hi-Fi slid 28c to $19.89 as outgoing CEO Richard Uechtritz sold 500,000 shares for around $10 million.

Myer and David Jones put on 1.2% and 1% to $3.43 and $5.04 on speculation they will report improved trading at their first-half results meeting.

Telstra was unchanged at $2.91 as the Telecommunications sector was also flat.

Around the region, the Nikkei 225 gained 187.4 to 10,556.4, while the NZSE50 rose 8.2 to 3,222.8. The Straits Times Index advanced 35.3 to 2,825.6. The Hang Seng gained 398.1 to 21,186.1.

Spot gold was trading at US$1,134.95 per ounce, while the Aussie was buying US$0.9116.

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Charter Hall Retail acquires two properties
Charter Hall Retail announced the acquisition of a shopping centre located in Canberra and a bulky goods retail centre in Adelaide for a total of $69.8 million. The trust said the assets were acquired at an average yield of 9.5% before acquisition costs and would be funded through existing cash reserves and debt capacity following the success of capital management initiatives over the past 18 months.

At the bell, Charter Hall Retail shares were unchanged at 59c.

Mosaic Oil posts a loss on write downs
Mosaic Oil has posted a first half post-tax loss of $4.36 million on the back of exploration write-downs of $4.7 million. Looking ahead, the Australian oil and gas producer said that during the rest of the financial year, the company plans to focus on development drilling in the Surat-Bowen Basin to increase revenue and profits in the 2H FY10 and beyond.

At the end of the day, Mosaic Oil shares were up 0.2c to 9.4c.

Arrow receives takeover offer
Arrow Energy confirmed it has received a non-binding indicative and conditional proposal from a company jointly owned by Royal Dutch Shell and PetroChina. The company said that under the proposal shareholders would receive consideration of $4.45 cash per share plus a share in a new entity comprised of Arrow’s international business.

By the close, Arrow shares were trading up $1.63 at $5.11.

Prime Infrastructure appoints CEO
Prime Infrastructure Group announced the appointment of former senior managing partner of major shareholder Brookfield Asset Management Brian Kingston as managing director and CEO. The company said the appointment followed the resignation of Jeff Kendrew who is set to join Brookfield as chief development officer of its global infrastructure platform.

At the finish, Prime Infrastructure shares were unchanged at $3.50.

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