ABC

The strength in banking stocks helped the local market end the week on a high.

The All Ordinaries index rose by 44 points to 5,844 while the ASX 200 added 0.9 of a per cent to 5,772.

National Australia Bank released a better than expected first half net profit of $2.7 billion, up 26 per cent from last year.

But its provision for bad debts has nearly doubled to $726 million.

NAB's shares climbed to their highest level in more than two months, gaining 4 per cent to $32.24.

Chief executive John Stewart says the worst of the credit crisis could be past, but he is tipping it will be a long and bumpy recovery that could last until 2010.

Meanwhile, two private sector reports say Australian banks are weathering the crisis well.

KPMG and PricewaterhouseCoopers say, overall, the banks' first half profits have risen slightly to between $8.8 and $8.9 billion.

That is partly because they have been increasing their market share of the lending business as smaller institutions struggle to fund their loans.

The resources sector has also performed well with BHP Billiton gaining 3.5 per cent to $46.50.

The Reserve Bank has indicated that if there is any adjustment to interest rates again this year, it will be up.

In its quarterly Statement on Monetary Policy today the bank says it is now expecting the commodities boom to deliver a bigger boost to the economy than previously thought.

It is forecasting that the Consumer Price Index will rise to 4.5 per cent, while economic growth will slow to 2.25 per cent by the end of the year.

About 5.00pm AEST, the Australian dollar was buying 94.23 US cents, 48.22 UK pence, 97.38 Japanese Yen, and 60.98 euro cents.

The price of oil continues to hit record highs.

A barrel of West Texas crude oil is fetching $US123.77 a barrel while spot gold is worth $US883.55 an ounce.