The Aussie market extended its rally last week amid progress by EU leaders to resolve the region's debt crisis.

The ASX 200 added 43 points (+1%) for the week, closing at 4206.

Financials drove the week's gains as concerns eased over their counterparty exposure to Europe's lenders. Westpac (ASX:WBC) rose 1.7% and Commonwealth Bank (ASX:CBA) put on 1.7%.

Rebounding commodity prices lifted some of resource majors. Rio Tinto (ASX:RIO) strengthened 2.9% however BHP Billiton (ASX:BHP) slipped 0.9%.

The two airliners performed strongly despite their contrasting fortunes.

Virgin Blue (ASX:VBA) soared 9.5% after announcing an alliance with Singapore Airlines, whilst Qantas (ASX:QAN) climbed 4.3% despite facing widespread strikes by disgruntled workers.

Fletcher Building (ASX:FBU) underperformed the broader market following a disappointing 1Q trading update. FBU shares sank 17% for the week.

Economics

The domestic employment picture was the key economic focus last week.

On Monday, the ANZ Job ads survey highlighted demand for new workers declining in September.

The survey showed the number of ads falling 2.1% for the month, as employers scaled back hiring intentions in the face of recent global volatility.

Newspaper ads were flat on-month, whilst internet ads declined 2.2%.

As it turned out the official data, which was released on Thursday, wasn't as bad, and instead surprised to the upside.

The unemployment rate dropped to 5.2% in September from 5.3% in August. The result beat expectations of no change in the jobless rate.

The economy added 20,400 jobs in August, above estimates of a 10,000 gain. Full-time employment increased by 10,800, whilst part-time jobs grew 9,600.

The deterioration in hiring intentions didn't stop employers from adding more staff to payrolls.

This suggests the economy may be in stronger shape than many people think, potentially reducing the need for the RBA to cut interest rates.

Overseas

The major international indices continued their rebound from September's sell-off, as global leaders presented a united front to tackle Europe's debt crisis.

The rally was fuelled predominantly by reports EU officials are pressing ahead with plans to release the next tranche of Greece's bailout money and recapitalise the region's banks.

Germany led the advance in Europe, surging 5.1% for the week. The FTSE rose 3.1% whilst the French CAC added 3.9%.

A mixed start to the US earnings season failed to dent investor optimism. The S&P500's 6% weekly gain was its biggest in more than two years. The Dow finished up 4.9%.

The Nasdaq's 7.6% surge was driven in large part by Apple, which rallied amid record demand for its iPhone 4S.

Asian indices enjoyed solid gains, with the Hang Seng rising 4.5% and Shanghai Composite appreciating 3.1% despite concerns over runaway inflation in China.

Commodities also took part in the global rally, with oil increasing 4.6% amid renewed optimism over energy demand. Precious metals strengthened on the back of a weaker US dollar.

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