Sydney, Sept 26, 2008 (ABN Newswire) - US political leaders have struck an agreement in principle on a $US700 billion bailout plan to revive the troubled financial system. It is hoped both houses of US congress will vote on the plan within days. Wall Street and European markets have reacted positively to the news, with major indices recording gains of around two per cent.

The Australia share market finished weaker yesterday after directionless trading as major traders stood aside on uncertainty over the US government's rescue plan. Analysts said investors were keen to buy banks, but not while uncertainty. The benchmark S&P/ASX200 closed down 54.5 points, or 1.09%, at 4927.4, while the broader All Ordinaries lost 47.4 points, or 0.95%, to 4960.8.

At 6.58am, the Sydney Futures Exchange's December Share Price Index contract was up 71 points at 5065.

Today the Australian dollar has opened weaker as optimism from US authorities near agreement on the $US700 billion rescue package boosted the American dollar. At 7am (AEST), the Australian dollar was trading at $US0.8351/56, down from yesterday's close of $US0.8390/93.

Crude oil also rebounded on hopes that the US bailout plan would stabilise the US economy and boost domestic energy demand. New York's main contract, light sweet crude for November delivery, rose $US2.29 to settle at $US108.02 a barrel.

Key Economic Facts and Figures

The Reserve Bank revealed yesterday that it had forged a pact with the banking regulator, the Australian Prudential Regulation Authority, the companies regulator, the Australian Securities and Investments Commission, and the Treasury Department, vowing to co-ordinate their response to any financial institution in distress.

The Reserve Bank's review of financial stability released yesterday was pessimistic about the global outlook, saying the problems in the global financial system are proving to be much more pervasive and costly than was anticipated by many observers a year ago.

M&A News

Macquarie Group Ltd(ASX:MQG) says it plans to sell its investment lending business in Australia and that the divestment won't materially affect its profits. Macquarie also said it is discussing with potential buyers of the business the possibility of an ongoing strategic partnership. It will allow it to continue to provide investment loan products to its clients.

The Australian Competition and Consumer Commission could force Wesfarmers(ASX:WES) to sell five Mitre 10 hardware stores it acquired over the past two years, after flagging a post-merger review of the deals. The ACCC announced this week it was monitoring the potential sale, which has been the subject of speculation for several weeks, with potential buyers including Woolworths(ASX:WOW). It is estimated Woolworths would offer between A$730 million and A$1 billion.

Jiangsu Shagang Group, mainland China's largest private steelmaker, has agreed to take a 45.3 per cent stake in Grange Resources(ASX:GRR) by injecting its Australian iron ore unit into the Perth-based company. Grange would merge with the Shagang-controlled Australian Bulk Minerals (ABM), the operator of an iron ore mine in Tasmania, in a transaction to create a company with a market value of A$1 billion and ore reserves of 403 million tonnes.

Important Corporate News

Foster's Group(ASX:FGL) has elevated acting chief executive Ian Johnston, who had served as a non-executive director of Foster's since September 2007, to head of the company following the departure of Trevor O'Hoy. In August, Foster's reported an 88.4 per cent decline in 2007/08 net profit to A$111.7 million, after booking writedowns.

Washington H Soul Pattinson & Co Ltd (ASX:SOL) yesterday reported a net profit of A$90.83 million for the year to July 31 2008, compared with A$130.22m in FY07. The net profit fall was due to the sale in FY07 of NBN Television.