Oct. 17 (Bloomberg) -- Australian stocks rose for the first day in three, led by Australia and New Zealand Banking Group Ltd. and Westpac Banking Corp. after Merrill Lynch & Co. raised its recommendation on banks to ``market-weight'' from ``underweight.''

BHP Billiton advanced as crude oil prices rose.

The S&P/ASX 200 Index increased 32.6, or 0.7 percent, to 4438.7 as of 12:08 p.m. in Sydney. About two stocks rose for every one that fell. The index has climbed 9.6 percent this year.

New Zealand's NZSX 50 rose 0.1 percent to 3356.36 at 3:08 p.m. in Wellington. Fisher & Paykel Appliances Holdings Ltd. rose.

``We think the banks will post healthy profits in a generally more defensive market environment,'' said Hamish Carlisle, an analyst, in a note to clients.

Banking stocks accounted for four of the five biggest index point gainers today. The 55-member S&P/ASX 200 Financial Index has climbed 8.9 percent this year, lagging behind the benchmark's climb, which was paced by energy stocks.

Carlisle named Westpac, the fourth-largest Australian lender, as Merrill's preferred Australian bank stock. Westpac rose 31 cents, or 1.5 percent, to A$20.63. Australia and New Zealand Banking Group, the third-largest Australian lender, rose 46 cents, or 2 percent, to A$23.48.

BHP Billiton, Australia's biggest oil producer, added 43 cents, or 2.2 percent, to A$20.41. Crude oil rose for the first day in three on concern production may be disrupted in the Gulf of Mexico. Crude for November delivery rose as much as $1.23, or 2 percent, to $63.86 a barrel in after-hours electronic trading in New York.

The S&P/ASX 200 Index's futures contract for December added 1 percent to 4450. The All Ordinaries Index rose 36.0, or 0.8 percent to 4407.3.

The following shares also rose or fell. The stock symbols are in brackets after the company names.

Australian stocks:

Gold producers: Gold may fall for a second week, a Bloomberg survey of 26 traders shows. Gold for December delivery fell 1.2 percent last week on the Comex.

Lihir Gold Ltd., Papua New Guinea's second-biggest producer of the metal, dropped 4.5 cents, or 2.5 percent, to A$1.75. Oxiana Ltd. (OXR AU), the nation's second-biggest gold miner, fell 0.5 cent, or 0.4 percent, to A$1.30.

ARC Energy Ltd. (ARQ AU) dropped 4 cents, or 2 percent, to A$2.02. The Australian oil and gas explorer said no hydrocarbons were found at its Bartsia 1 well, which will be plugged.

Austal Ltd. (ASB AU) surged 17 cents, or 7.9 percent, to A$2.32. The Australian boat builder won a U.S. Navy contract to build a $223 million combat ship, the company's biggest individual contract.

Australian Stock Exchange Ltd. (ASX AU) added 56 cents, or 2.1 percent, to A$26.78. Asia's second-biggest exchange by market value had its recommendation raised to ``neutral'' from ``underperform'' by Macquarie Equities Ltd. on strong trading volume and a positive three-to-five year outlook. The company was also upgraded to ``buy'' from ``hold'' at Citigroup Investment Research.

IM Medical Ltd. (IMI AU) rose 0.2 cent, or 9.1 percent, to 2.4 cents. The Australian medical imaging system developer received two more orders for its Intelliheart device, which helps diagnose risk of heart disease.

Mesoblast Ltd. (MSB AU) climbed 14 cents, or 18 percent, to 89 cents. The Australian biotechnology company met with the U.S. Food & Drug Administration to discuss regulatory approval for its stem cell technology. Mesoblast sped-up its development timetable which will cut costs, it said in a statement today.

Multiplex Group (MXG AU) rose 16 cents, or 4.9 percent, to A$3.46. The company, which is rebuilding London's Wembley Stadium, said chief financial officer John Corcoran will move to a new role as chief investments officer.

Neptune Marine Services (NMS AU) rose 8 cents, or 14 percent, to 66 cents. The maker of underwater welding systems was given A$2 million by the commonwealth government to help market its welding system which allows repairs to be carried out underwater.

Powerlan Ltd. (PWR AU) rose 7 cents, or 18 percent, to 46 cents. The Australian software developer agreed to sell its subsidiary, FinancialBPO Pty., to Computershare Ltd. for A$9.5 million ($7 million) plus 1 million Computershare shares, according to a statement late Friday.

New Zealand stocks:

Fisher & Paykel Appliances Holdings Ltd. (FPA NZ) rose 1 cent, or 0.3 percent to NZ$3.19. New Zealand's biggest maker of home appliances said branding survey company Superbrands Ltd. included the company's products in its U.K. CoolBrand Leaders list for 2005. Richard St. John, U.K. sales and marketing manager for Fisher & Paykel, said inclusion on the list will give it an advantage in the U.K. market.

To contact the reporter on this story: Vesna Poljak in Sydney at vpoljak@bloomberg.net

Last Updated: October 16, 2005 22:14 EDT