July 30 (Bloomberg) -- Australian shares rallied after their worst week in 15 years prompted speculation that stocks had become cheap relative to earnings prospects.

BHP Billiton Ltd., the world's largest miner, and Rio Tinto Group, which is due to report profit this week, climbed after copper and oil prices advanced. The two stocks were among the top four contributors to the S&P/ASX 200 Index's slide last week.

``There are certainly pockets of value emerging in the market,'' said Steven Marsh, who helps manage the equivalent of $563 million at Trust Co. in Sydney. ``We're about to get into reporting season, so most people including ourselves will be waiting to assess the results before piling back in.''

Macquarie Bank Ltd., Australia's largest investment bank, was the biggest drag on the S&P/ASX 200 on speculation higher credit costs will slow global takeovers and dent advisory fees.

The stock benchmark gained 25.90, or 0.4 percent, to 6,108.80 at the close in Sydney. Eighty-six stocks gained, 93 fell, while 22 were unchanged on the 201-member index. The measure plunged 5.3 percent last week, the most since the index's data began in 1992.

Stocks fell last week in a selloff that erased about $2.1 trillion from global markets amid concern a U.S. housing slump will deepen and on speculation a global takeover boom that had boosted share values is ending.

The S&P/ASX 200's relative strength index, based on its 14- day moving average, ended last week with a reading of 32, close to the 30 threshold indicating to some technical analysts that shares are poised to advance.

Miners Advance

``Our stock market has been very strong, so even when you see a correction it is still at a high level,'' Australia's Treasurer Peter Costello told Sky News today. ``The fundamentals are strong in Australia and I am sure we can weather global instability.''

BHP gained 82 cents, or 2.3 percent, to A$36.79. Shares of the Australia's biggest oil and gas producer, slid 6.3 percent last week. Rio Tinto Group, the world's third-largest mining company, rose A$1.16, or 1.3 percent, to A$91.76 after a 9.3 percent decline.

Crude oil futures in New York rose 2.8 percent to $77.02 a barrel on July 27, 1 cent short of the previous record close on July 14, 2006. Copper prices gained 0.7 percent the same day, ending a four-day, 4.9 percent slide.

Lenders had led the S&P/ASX 200 down as much as 0.6 percent today before a rally in the afternoon. Commonwealth Bank of Australia, the nation's biggest by market value, added 3 cents, or 0.1 percent, to A$54.60 after sliding 1.1 percent earlier. Westpac Banking Corp., Australia's fourth-largest lender, gained 7 cents, or 0.3 percent, to A$25.78, reversing a 0.8 percent drop.

`Tougher To Finance'

Futures on the S&P/ASX 200 due in September rose 0.1 percent to 6,073. The All-Ordinaries Index added 0.3 percent to 6,146.50.

Macquarie Bank fell A$1.15, or 1.4 percent, to A$80. The stock last week slumped 10 percent, the biggest drop since the week ended Feb. 3, 2006.

``Macquarie is being hit with the credit spreads blowout, so it's becoming tougher to finance deals,'' said Trust Co.'s Marsh.

Cadbury Schweppes Plc last week became the first company to delay an acquisition because of ``extreme volatility'' in debt markets. The risk of owning European corporate bonds last week soared to a record, credit-default swaps show. Traders use the swaps to bet on the ability of companies to repay debt.

The following stocks rose or fell. Stock symbols are in brackets after company names.

Santos Ltd. (STO AU), the country's third-biggest oil producer, fell 30 cents, or 2.2 percent, to A$13.15. The company on July 28 shut down a crude-oil pipeline in Queensland state after a leak that triggered the evacuation of 400 homes in southern Brisbane.

Leighton Holdings Ltd. (LEI AU), Australia's biggest engineering and construction company, climbed 52 cents, or 1.4 percent, to A$37.42 after buying a 4.9 percent stake in smaller rival Macmahon Holdings Ltd.

Paladin Resources Ltd. (PDN AU), an Australia-based uranium producer, dropped 7 cents, or 0.9 percent, to A$7.43. The company cut a production forecast for a mine in Namibia this fiscal year because of slower-than-expected ramp-up of output.

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By Darren Boey