SYDNEY, AAP – A sudden drop in the ASX indices following reports of shelling in Ukraine has wiped almost all the earlier gains.

The market closed only marginally higher on Thursday after investors reacted to reports that Ukraine government forces shelled Russian-backed rebels.

European and US leaders earlier this week said Russian forces gathered on the Ukraine border could invade within days.

Most share categories on the ASX closed higher. CSL gained five per cent to $277.00 and made healthcare shares the top improvers.

The benchmark S&P/ASX200 index closed up 44.8 points, or 0.61 per cent, to 7329.7 points.

The All Ordinaries index was higher by 39.1 points, or 0.51 per cent, to 7612.1 points.

The Australian dollar was buying 71.82 US cents at 1620 AEDT, higher than 71.55 US cents at Wednesday’s close.