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MELBOURNE, Dec 24 AAP

December 24 2012, 12:28AM

Australian shares were trading higher at noon on Monday despite falls on Wall Street on Friday as the US economy edges toward the so-called fiscal cliff.

At 1220 AEDT on Monday, the benchmark S&P/ASX200 index was up 13.6 points, or 0.29 per cent, at 4,637.2, while the broader All Ordinaries index was up 12.3 points, or 0.27 per cent, at 4,647.5.

On the ASX 24, the March share price index futures contract was up 24 points at 4,616 with 7,084 contracts traded.

All major sectors were up, led by resources, financial and industrial stocks, but had given up some of their opening gains.

US stocks sunk heading into the weekend as Republican and Democrat leaders remained poles apart on the question of what stage high income earning individuals should stop getting tax breaks.

A deal is needed to avert the so-called fiscal cliff - a package of tax rises and spending cuts due to begin on January 1.

By the end of Friday's session on Wall Street, US futures had started to recover, which was the reason for the early gains on the local market, IG Markets market strategist Stan Shamu said.

"That fiscal cliff is the main issue now before they reconvene on Thursday (December 27) to try and knock something up," Mr Shamu told AAP.

"We will probably tread water and maintain tight ranges until we get something more definitive at the end of the week."

A rising iron ore price due to stronger Chinese demand is also supporting the larger miners on the Australian market, he said.

Resources giant BHP Billiton was up 20 cents to $36.90, Rio Tinto had climbed 11 cents to 64.85, but iron ore producer Fortescue Metals was 2.5 cents down at $4.355.

Among the banks, ANZ shares had improved 3.5 cents to $24.985, Commonwealth Bank had increased 38.5 cents to $62.385, Westpac added three cents to $26.20 while National Australia Bank was 4.5 cents lower at $24.895.

Shares in mining contractor Macmahon Holdings fell after it said it expected to make just $2 million on the $14 million sale of its construction business to Leighton Holdings, due to $12 million in redundancy costs.

Macmahon shares gave up one cent to 22.5 cents.

Billabong shares were flat after the troubled surfwear retailer said it would allow its latest suitor, former board member Paul Naude, to conduct due diligence on the company.

Billabong shares were at 82.25 cents.

It will be a shortened trading day in Australia, with the market closing at 1430 AEDT ahead of the Christmas Day holiday on Tuesday.