Sydney, Oct 9, 2007 (ABN Newswire) - Australian shares shed early losses to rise 0.2 per cent, buoyed by gains in banking shares, though a drop in metals and oil prices pressured resource firms like BHP Billiton.

At Midday the S&P/ASX200 index is up 26 points to a high of 6,680 and on the futures market the SPI- 200's up 41.

In economic news, Australian business conditions softened slightly from record highs in September while confidence declined for the fourth straight month as firms fretted about interest rates and market volatility.

The full report is available at the following video and audio links.

Video Link

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Audio Link

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The National Australia Bank's business conditions index dipped 3 points to 16 points in September, the lowest reading since February but still strong in historical terms.

In company news this hour, a consortium of Australasian and global infrastructure funds has agreed to buy the UK's Southern Water, for just over $8.5 billion. The consortium is led by JPMorgan Chase with a 32 percent stake. The second largest member, Australia's Challenger Infrastructure Fund, will take 27 per cent, with the rest going to seven Australasian superannuation funds and other investors. Royal Bank of Scotland put Southern Water up for sale earlier this year. The company provides water and wastewater treatment in southern England counties including Kent, Sussex, Hampshire and the Isle of Wight. Challenger shares are on a trading halt and last traded at $3.86.

Living Cell Technologies has announced promising results from a diabetes trial carried out in Russia. Living Cell Technologies found that by injecting diabetic with the smallest dose of pig cells gave them a greater than 25 per cent reduction in their daily insulin requirements. The New Zealand based company was to announce the findings next year after further tests but revealed the findings now to allow a US-investment group to undertake due diligence. If New Zealand authorities give the go-ahead for the trials, people there and in Australia may be able to undergo the procedure within five years. Shares in Living Cell Technologies are up 3.13 per cent to $0.165.

Now to warrants with Macquarie Bank. After initially opening in the red, Aussie stocks have fought back and are higher, on the back of firmer banks and strength in retailers like Woolworths.

BHP Billiton also opened near its lows and has tracked higher as bargain-hunters snap up the stock, in anticipation of a favourable round of iron ore price negotiations, that are due to begin soon. Warrant traders used the initial weakness in the stock to open positions to the long side through BHPWMN Oct07 $41 Call and BHPWMO Nov07 $50 Call.

A pull-back in gold overnight has seen shares in Lihir Gold slip in trade, prompting warrant traders to buy in anticipation of a bounce through LGLIM4 Jun08 $3 Deferred Instalment.

Turning now to market indices. The index posting the biggest gain by percentage points is the Consumer Stapels which is up 141 points to 8,656. Shares in Woolworths are up 2.95 per cent to $31.80. Shares in Coles Group and Lion Nathan are also higher.

The worse performing index by percentage points in the Materials, which is down 179 points to 15,369. Shares in Riot Tinto are down 2.29 percent to $108.77. Shares in BHP Billiton and Fortescue Metals are also lower.

In Tokyo, the Nikkei is up 135 points and in New Zealand the NZSX-50 is down 24.

Gold is currently trading at $731.70 US an ounce and one Australian dollar's buying 89.36 U.S cents.


Source: Finance News Network © 2007 http://www.finnewsnetwork.com.au

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