Bargain hunters push shares higher Local shares gained on Tuesday despite a worsening federal budget outlook, as investors focused on an improving global growth outlook. The benchmark S&P/ASX 200 Index rose 13.6 points, or 0.3 per cent, to 5103, while the broader All Ordinaries index added 13.0 points, or 0.3 per cent, to 5106.1. The index got a strong lead from offshore, after all major equity markets in the United States, the United Kingdom and Europe closed higher. Global equities were buoyed by the release of a series of better than expected economic data in the UK and Europe data that were interpreted as proof the global demand outlook is improving. Traders also said that the approximately 4.5 per cent fall in the market over December had created buying opportunities. Goldman Sachs broker Richard Coppelson has predicted the return of $8.39 billion worth of dividends to investors over the five trading days between December 12 and December 19 will drive a an end-of-year rally as much of this money is re-invested in the sharemarket. But shares trimmed earlier gains following the release of the federal government's Mid-Year Economic and Fiscal Outlook, which forecast a combined deficit of $123 billion over the next four years and for gross debt to hit $667 billion in a decade. Treasurer Joe Hockey said "all options are now on the table" flagging deep cuts in the May budget. "The market is now treading water, throw in an imminent US Federal Open Markets Committee announcement on Thursday and investors are on the sidelines," said CMC Markets sales trader Betty Lam. Today's lower trading volumes are likely to remain unseasonably low until Ben Bernanke takes to the stand for the final time Thursday morning. The minutes of the Reserve Bank of Australia's December meeting, also released on Tuesday, explicitly left open the possibility that the central bank might cut the official interest rate from its current record low 2.5 per cent in 2014 if it judges the domestic economy is worsening. However, the RBA also noted that the benefit of previous cuts are still flowing through. "The RBA no doubt would be pleased to see the Fed begin to taper its asset purchases sooner rather than later in the hope that this would increase the likelihood of a stronger US dollar outlook and therefore a lower Aussie dollar," Citi economist Paul Brennan said At the local close, the dollar was buying US89.41¢, down from US89.54¢ at the previous close. Food and liquor was the best-performing sector, up 1.3 per cent. Coles owner Wesfarmers led the stock exchange higher, up 2.5 per cent to $42.56. On Monday, Insurance Australia Group, owner of NRMA and CGU, said it had agreed to buy Wesfarmers" Australia and New Zealand insurance underwriting business. IAG dropped 5.3 per cent to $5.40 after emerging from a trading halt on Tuesday. Australia's biggest insurer, QBE Insurance Group, dropped 1.9 per cent at $10.16. Telstra Corporation rose 0.8 per cent to $5.02. The big four banks all lifted. ANZ and National Australia Bank both rose 0.6 per cent to $30.48 and $33.40 respectively. Commonwealth Bank added 0.4 per cent to $73.93, and Westpac gained 0.3 per cent to $30.87. Investment bank Macquarie Group added 1.2 per cent to $52.10. The metals and mining sector was flat as reforms in China to reduce air pollution cause some concerns for the demand outlook in Australia's biggest export market for iron ore and coal. BHP Billiton was flat at $35.66. The mining giant announced the closure of its Perseverance Nickel Mine, which has been beset with operational problems at a time when nickel prices have tanked. But Rio Tinto added 0.6 per cent to $65.30, while Fortescue Metals Group rose 3.2 per cent at $5.52, despite the spot price of iron ore, landed in China, falling to $US134.90 a tonne. Utilities was the worst-performing sector, down 0.8 per cent. However, Envestra, which provides natural gas haulage services, jumped 4.7 per cent to $1.12 after announcing the receipt of a revised proposal from shareholder APA Group to acquire the rest of the company for $1.71 per share. APA Group shed 3.6 per cent to 23¢. Embattled mining services company Forge Group was the best-perfomring stock, up 17.8 per cent to 63¢ , after it announced $40 million worth of new North American contracts. Boart Longyear, another resources service company that got hammered this quarter after added 9.1 per cent to 36¢. REA Group, which operates real estate advertising website realestate.com, was the worst-performing stock, dumping 6.9 per cent to $37.74, following the resignation of chief executive Greg Ellis without a successor. REA Group has been the best-performing stock in the benchmark index in 2013, climbing more than 125 per cent year-to-date. It was a disappointing day for new market listings. Packaging company Pact Group slumped 12.6 per cent to $3.32 on debut. Another packaging brand, Orora, will list on Wednesday in a spin-out from Amcor.