Pureplay iron ore miners plunged on Thursday after a drop in the price of the metal, despite the overall sharemarket finishing higher ahead of the European Central Bank's expected stimulus announcement.

Last week's promising rally in iron ore prices has reversed, with the metal dropping to $US67.81 per tonne late on Thursday. Fortescue plunged 6.47 per cent to a six-year low of $2.17, Atlas Iron dived 5.71 per cent to 16.50¢ and BC Iron dropped 5.94 per cent to 47.50¢.

The market got a good lead from Wall Street and Europe, with overseas investors also taking heart from the prospect of a revived euro-zone economy.



The All Ordinaries finished 0.43 per cent higher at 5390.50 and the ASX200 increased 0.49 per cent to 5419.90.

"There was a bit of profit-taking in the afternoon," said Quay Equities head of trading Tristan K'Nell. "That's just investors taking a bit of risk off the table ahead of the European meeting."

Mr K'Nell said the markets had priced in a stimulus program of €50 billion ($71 billion) a month.

"It would have to be substantially on the upside to see any further market rally," he said.

"Unless they really blow us out of the water with, say, 70 or 80 billion euros, I don't think the market's going to move too much."

Apart from the pureplay iron ore miners, the resource sector posted strong gains. Among the big miners, BHP closed up 2.85 per cent to $28.85 and Rio Tinto lifted 2.56 per cent to $56.50.

"They've been well supported with broker notes over the last few days, plus production figures from the last few days have been pretty good," Mr K'Nell said.

Amcor fell 4.04 per cent to $12.36 after it revealed that chief financial officer Ron Delia will take over as managing director from Ken Mackenzie, who will retire after 10 years at the helm.

Mr MacKenzie will leave Amcor at the end of the 2015 financial year.

Labour hire and recruitment firm Skilled Group dived 4.98 per cent to $1.43 after it rejected a merger proposal from rival Programmed Maintenance Services.

Programmed made its "merger of equals" proposal on December 17, offering 0.5032 Programmed shares and 25¢ for every Skilled share.

But Skilled dismissed the approach, arguing that the offer undervalues the company - despite agreeing that bringing the two businesses together would achieve about $20 million in annual cost savings.

Programmed fell 2.89 per cent to $2.35.

The plummeting oil price led Virgin Australia to announce it will remove fuel surcharges on flights to the US and reduce fares on the trans-Pacific route by up to $50 - a move that will put pressure on rivals Qantas and Emirates to slash their own fuel fees.

The news follows months of criticism from consumer groups about airlines refusing to cut fuel surcharges.

Shares in Qantas dropped 0.43 per cent to $2.33 while Virgin rose 2.2 per cent to 47 cents.

Banks were up despite a UBS assessment that their share prices could be weakened if the global banking regulator goes through with plans to standardise banks' approach to risk.

Proposals by the Basel Committee on Banking Supervision to reduce excessive variability in global banks' risk weighting "remains a key risk for the [Australian] banks", UBS analyst Jonathan Mott told the investment bank's clients in a briefing note.

The Basel committee's proposals would hit Australian banks harder than their global peers due to their high allocation of lending towards mortgages, Mr Mott said. This was on top of the uncertainty created by the financial system inquiry's call for bank capital to be "unquestionably strong".

The banks were all up, with Westpac rising 1.44 per cent to $33.86, Commonwealth Bank rising 0.66 per cent to $85.23, ANZ increasing 0.44 per cent to $31.77 and National Australia Bank climbing 0.73 per cent to $34.33.

The first medical marijuana company to list on the Australian stock exchange, Phytotech, enjoyed a solid debut. Shares in Phytotech's $5 million IPO opened at 20¢ and finished the day 110 per cent higher at 42¢.

The Perth-based company will target medical cannabis markets in the US, Canada, Israel and Europe with a suite of medical cannabis delivery systems. It hopes to introduce products to Australia and New Zealand if medical cannabis is legalised.