Sydney, Sept 24, 2008 (ABN Newswire) - The Australian stock market closed almost 2% lower yesterday amid concerns on the short selling ban, as well as over the effectiveness of the US government's proposed bailout of the financial sector. Analysts said investors are waiting for some real clarity from the government.

Overnight US stocks fell again as investors worried that the US congress was beginning to doubt the need for a government bailout of financial institutions as a way to revive credit markets.

Yesterday, the benchmark S&P/ASX200 index closed 97 points lower, or 1.93%, at 4923.5 yesterday, while the broader All Ordinaries lost 92.4 points, or 1.83%, to 4957.7.

At 6.49am, the Sydney Futures Exchange's December Share Price Index contract was down 75 points at 4935.

The Australian dollar has opened weaker. At 0700 AEST, the Australian dollar was trading at $US0.8326/31, down from yesterday's close of $US0.8399/03.

Oil prices fell overnight as uncertainty over the US financial bailout plan and a stronger dollar led investors to shed commodities, after New York crude soared more than $US16 in its biggest-ever daily jump on Monday. New York's new main contract, light sweet crude for November delivery, showed a loss of $US2.37 at $US107 a barrel.

Key Economic Facts and Figures

A new study by the International Monetary Fund (IMF) confirms Australia is well placed to weather the global economic downturn. The report showed Australia's economic strength was the result of responsible economic management, the strength of banking and regulatory systems, and the fiscal position outlined in Labor's first budget.

Official figures show the profit margin for Australia's major banks was 54.8 per cent in the March quarter, resulting in A$1 profit for every A$2 in interest and fee income they charged. The major banks were enjoying record profit margins as they refused to pass on the RBA rate cut and lifted mortgage interest rates. The banks' profit margin during the quarter was more than double the long-term average return of 26.9 per cent.

The Department of Education, Employment and Workplace Relations releases its skilled vacancies survey for September.

M&A News

Hong Kong's Crosby Capital(HKG:8088) is offering a A$182 million bid for Medusa Mining(ASX:MML). Medusa yesterday reiterated its opposition to the unsolicited bid, urging shareholders to take no action. It is unclear if Russian billionaire Alisher Usmanov, with a 12 per cent stake, will accept the bid.

Sims Group(ASX:SGM) has bought the assets of Weinert Recycling, a ferrous and non-ferrous scrap metal recycler with operations in Middletown and Liberty, New York. Sims did not disclose the financial terms of the acquisition but said "the cost is not material to Sims".

Important Corporate News

Premier, which is completing its full takeover of Just(ASX:JST), on Tuesday released annual results for the jeans, women's wear and casual wear retailer. Premier said the retail environment will remain difficult in the new fiscal year. Some global retail brands are expected to brought to Australia despite the deteriorating consumer spending environment, which clipped Just's fiscal 2008 profit. Just net profit for the year ended July 29 was A$49.12 million, down 23.1 per cent on the previous year.

David Jones(ASX:DJS) has reported its highest full year profit result and dividend since listing in 1995, predicting "at least" 5-10 per cent growth in profit in 2009. The company lifted its profit by 25.1 per cent to A$137.053 million in fiscal 2008 and declared a final dividend of 16 cents per share fully franked.

Qantas Airways(ASX:QAN) has shelved a proposal to spin off its loyalty scheme, the airline said, citing market conditions. Qantas said in the period of market volatility it would be appropriate to defer the IPO. The board said preparations would continue for a minority IPO in the first half of 2009.