- Scorecard: Australia vs England
Chasing 258 for victory, Australia lost an early wicket when Tim Paine was caught behind for four off Graham Onions in the second over, but after that they allowed England no joy as they cruised home.
Ponting smashed his 28th century in ODIs to finish unbeaten on 111 in 115 deliveries, while Watson blazed his way to a strokeful 136 from 132 deliveries, laced with ten boundaries and seven sixes.
The duo pummeled the English bowlers to submission in an unbroken stand of 252 runs in 40.2 overs, Australia's highest partnership for any wicket in ODIs, as the World champions cruised to 258 for one in 41.5 overs.
In Monday's final, Australia face the winner of Saturday's second semi-final between Pakistan and New Zealand.
Earlier, Tim Bresnan's brilliant counter-attacking innings of 80 helped England recover from a bad start and post a healthy total.
Electing to bat, England started disastrously, losing a couple of early wickets, before Paul Collingwood restored some order with a quick 34 from 30 deliveries.
However, his dismissal saw them suffer a mini collapse. They were reduced to 101 for six in the 21st over but Bresnan hit them out of trouble, slamming 11 boundaries in his 76-ball knock.
Bresnan's maiden half-century in ODIs brought England back in the match. He added 107 runs off 121 deliveries for the seventh wicket with Luke Wright, who chipped in with a vital 48.
It turned out to be a memorable day for Australia wicketkeeper Tim Paine, who took five catches in the innings.
ENGLAND
Andrew Strauss started off in style, hitting a boundary through point of Brett Lee in the first over of the match. He was a lucky in the next when he attempted to pull Peter Siddle and got a top edge which ended up over the third man boundary for a six.
However, Siddle, named ICC Emerging Player of the Year, got his revenge a few deliveries later. Strauss, who had scored 14 from 10 deliveries, tried to flick one to square leg but James Hopes came up with an excellent catch, diving to his left to send back the England captain. (15-1, 2)
Brett Lee then struck, claiming the wicket of Owais Shah for a duck in the next over, to give Australia early control. Shah walked across and tried to play a short delivery fine on the leg side but got a thin edge and Paine completed another good catch, diving full length to his left. (16-2, 2.4)
If Australia thought those two quick wickets would peg England back, they were in for a surprise, as Collingwood came up with a brilliant counter-attacking innings.
Ricky Ponting made a shocking decision to replace Lee with all-rounder James Hopes in the ninth over of the innings. The move backfired big time as Collingwood smashed Hopes for 14 runs in the over, hitting two boundaries and a straight six.
ICC Cricketer of the year Mitchell Johnson also did not have a great start as Collingwood slammed him for back-to-back boundaries, as England raced to 68 for two after ten overs.
But Australia struck against the run of play, claiming the vital wicket of the free-flowing Collingwood, who was dismissed for 34 from 30 deliveries. Johnson forced Collingwood into a pull shot with a sharp bouncer that he gloved behind and was taken by wicketkeeper Paine one-handed after a full length leap. (71-3, 11.2)
Joe Denly flattered to deceive before falling caught behind after a solid 36 from 44 deliveries. The right-hander looked set for a big knock but played at a wide, outgoing delivery from Siddle and knicked it behind for Paine to complet another good catch, his third of the innings. (91-4, 17.2)
England's woes could have worsened had the Aussies not erred in the field. Morgan (6) played a rash, lofted shot through the off-side off Watson's bowling in the 19th over, hitting it straight to Hopes at point. But, to Australia's horror, the catch was spilled.
But Watson did not have to wait long for a wicket. Four deliveries later, he did the job himself when debutant Steve Davies inside-edged onto his stumps and fell for 5. (100-5, 18.5)
England's batting collapse continued as Watson struck in his next over with the wicket of Morgan. The left-hander, who made 9 from 27 deliveries, went for the forceful cut shot through point but ended up edging it behind to Paine. (101-6, 20.2)
Bresnan and Luke Wright showed great purpose as they set about repairing the damage with some intelligent batting in the middle overs. They put on 50 runs for the seventh wicket in 73 deliveries without any boundaries for nearly ten overs before Wright broke the shackles. The right-hander launched off-spinner Nathan Hauritz for two big sixes through midwicket to take England to 173 for six.
Bresnan, included after Stuart Broad was ruled out due to injury, proved his worth with a solid half-century. He slammed Johnson through point for a boundary and followed it with one through fine leg before bringing up his half-century off 53 deliveries in the 39th over.
Bresnan continued his free-flowing approach and pulled Siddle through fine leg to bring up the 100-run partnership for the seventh wicket with Wright.
Just when England were getting ready to take the Batting Powerplay, Australia made further inroads by claiming the wicket of Wright, who was caught behind off Siddle after a good innings of 48 from 68 deliveries, which was inclusive of two boundaries and two sixes.
Wright had helped England inch their way back in the contest with a fighting 107-run partnership in 19.4 overs for the seventh wicket with Bresnan.
Johnson was left completely stunned when Bresnan swayed back to a bouncer and successfully executed the upper cut for a boundary over the wicketkeeper.
The bulky right-hander then got two more streaky boundaries in the 43rd over when outside edges off his blade off successive deliveries flew past a diving Paine to frustrate the Australians.
Graeme Swann also wasted no time in getting going and hit Siddle for boundaries in successive overs. He was proving to be the perfect foil for Bresnan.
But England lost Swann in the worst possible manner when he was run out for 18 attempting a second run. Swann added 37 runs in 31 deliveries for the eighth wicket with Bresnan to keep the scoreboard moving at a fair rate but was dismissed just when the Poweprlay started after the 45th over. (245-8, 45.1)
In the next over, Lee ended Bresnan's brilliant innings of 80 with an unplayable yorker that crashed bang into the middle stump. Bresnan, who hit 11 boundaries in his 76-ball knock, had single-handedly turned England's fortunes in the match. (251-9, 46.2)
The last pair could not survive the remaining overs. Graham Onions was run-out for 1 as England were dismissed for a competitive 257 in 47.4 overs.
Siddle was the most successful bowler, claiming three for 55 in ten overs, while Watson chipped in with vital wickets, claiming 2 for 35, and Lee took two for 46.
Australia
The start of Australia's innings was delayed by around 15 minutes after insects invaded the ground.
Graham Onions dealt Australia an early blow when he claimed the wicket of Tim Paine (4) with his third delivery. The Aussie wicketkeeper flashed at a wide, full delivery only to edge it behind for debutant Steve Davies's first catch in international cricket. (5-1, 1.3)
Surprisingly, England went on the defensive quite early as the slips were withdrawn, with Strauss looking to stop the flow of boundaries even though Australia were content in playing steadily.
Ricky Ponting came in with a positive approach and took no time in finding his feet. He smashed James Anderson for three boundaries to take Australia to 38 for one after seven overs. He slammed another couple of boundaries off Bresnan's first over to help Australia reach a solid 63 for one after ten overs.
After a quick start, Australia's batsmen were bogged down by England's bowlers, and just 35 runs came in the next ten overs, including just one boundary, as the scoreboard read 98 for one after 20 overs.
England's pacers resorted to a lot of short pitched stuff, pushing the Australian batsmen on the backfoot, while also challenging them to take on the square leg fielder.
With the field spread around, Australia seemed content in milking the bowlers and keeping wickets intact till Watson broke the shackles with a six over long-on against Swann. In fact, Watson (41) was lucky to survive as Wright, fielding on the boundary, tried to catch it over his head but ended up pushing it back over the fencing. The tall all-rounder went on to complete his fifty off 70 deliveries with a single through long-off in the 23rd over.
With Ponting and Watson looking in control, Australia look the firm favourites at the halfway stage, having reached 121 for one.
Watson tried to disturb Swann's rhythm as he slog-swept the off-spinner high into the stands at midwicket for his second six, in the 28th over.
In the next over, Ponting scaled an important milestone, hitting a boundary to cross 12,000 runs in one-dayers. Australia's captain became only the third player in history, after Sachin Tendulkar and Sanath Jayasuriya, to scale the 12,000-run peak in ODIs when he smashed Onions through square leg for a boundary to reach 67.
With nothing working against the two batsmen, Strauss introduced part-timer Owais Shah into the attack, but he was despatched for a couple of boundaries by
Watson in the 33rd over. Australia's chase was gathering steam as Ponting slammed Bresnan over square leg for his first six of the innings and Watson creamed one through the covers two deliveries later.
Ponting completed his century with an elegant boundary through covers off Bresnan in the 37th over. The 34-year-old, who never looked in any trouble during his innings, brought up his 28th century in ODIs in 104 deliveries; it was laced with 11 boundaries and a six.
Watson completed his century in the next over in some style when he dismissed Anderson for a powerful six over mid-wicket. It was his third century in one-dayers and came off 115 deliveries; it was studded with nine boundaries and three sixes and ensured that Australia's chase never went off track.
Watson repeated the dose on Bresnan in the next over when he thumped another short delivery over the midwicket fence for a six, which also struck a spectator on the head as he tried to catch it but failed to judge properly.
The duo also broke the record for the highest partnership at the venue, surpassing the 206-run stand between Mohammad Yousuf and Shoaib Malik against India in the group stage of the tournament.
After 40 overs, Australia were a comfortable 230 for four, needing another 28 from the last ten overs.
Australia seemed in a hurry to finish things as they the batting Powerplay in the 41st over and immediately Watson took Collingwood to the cleaners with three sixes in the over. Watson launched three huge sixes through the leg side to break the record for the highest partnership for Australia for any wicket. The previous record was held by Ponting and Andrew Symonds, who put on 237 runs for the fourth wicket against Sri Lanka in February 2006.
The duo were involved in an unbroken stand of 252 in 40.2 overs for the second wicket as Australia cruised to 258 for one and won by nine wickets and 49 deliveries to spare.
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