Sydney, Oct 13, 2008 (ABN Newswire) - The Australian share market ended a horror week on Friday, down more than 8% in a session that wiped A$106 billion from the value of stocks on the bourse. Last Friday the S&P/ASX200 index fell 8.3% in mid-afternoon trading, losing 360.2 points to plunge to 3960.7, the biggest one-day loss for the ASX200 index. Its affiliate, the All Ordinaries index, had its worst day since the October 1987 crash, losing 8.2%, or 351.9 points, to 3939.4. The ASX200 lost almost 16% for the week, about three times the amount it lost in the week after the September 11 attacks in 2001.

Today Australian stocks have opened higher as the G7 and G20 meetings over the weekend restored a little confidence. In early trade, the benchmark S&P/ASX 200 index rose as much as 5%, or 197 points, to 4157.7.

The December Share Price Index futures contract on the Sydney Futures Exchange was up 27 points at 4080.

Prime Minister Kevin Rudd has announced that all deposits in Australian financial institutions would be guaranteed for three years. The government also doubled to $8 billion the funds available to improve liquidity in financial markets. The guarantee scheme is helping to buoy the Aussie dollar. At 7:15 the Australian dollar soared 3.2%, the most since Sept. 19, to 66.72 US cents.

The stunning collapse in oil markets accelerated on Friday, sending a barrel of crude plunging below $US78 as investors grew more pessimistic about the resolution of the global economic crisis. Light, sweet crude for November delivery ended $US8.89 lower at $US77.70 a barrel on the New York Mercantile Exchange.

Key Economic Facts and Figures

Reserve Bank documents show big banks ignored the sub-prime crisis in the US and actively took greater risks in the home mortgage market. The change in lending standards was driven by competition and the housing boom. In April this year, as the Reserve Bank ended its run of interest rate rises, an RBA analysis found the relaxation of lending standards had allowed some Australians to take on extraordinary debts. Households with annual incomes of A$60,000 or more could borrow up to five times their annual income.

The federal Government shore up the market confidence in the financial system by guaranteeing investors' deposits. The Government will also guarantee term wholesale funding by Australian banks operating in international markets and double the value of residential mortgage-backed securities it will buy to A$8billion to help shore up the property market.

M&A News

Suncorp-Metway(ASX:SUN) has scrapped plans to sell its banking and asset management divisions after receiving just one low-ball offer. It is said that Suncorp was reconsidering its plans after Commonwealth Bank of Australia (ASX:CBA) and National Australia Bank(ASX:NAB) failed to lodge bids by Suncorp's Friday deadline.

Leighton(ASX:LEI) confirmed on Friday that it had increased its stake in Macmahon(ASX:MAH) from 14.9 percent to 17 percent. Leighton has made an agreement not to acquire more than 19.9 percent of Macmahon for two years without the target's consent.

Incremental Petroleum's(ASX:IPM) biggest shareholder has accepted the offer by Cooper Energy(ASX:COE), which is making a hostile A$104 million takeover bid. Cooper insiders said last night they were confident of securing more acceptances this week in light of the sharemarket turmoil, which has forced many investors to reconsider their portfolio strategy.

Queensland Gas Company (ASX:QGC) has won approval from the Australian Competition and Consumer Commission for its acquisition of Sunshine Gas(ASX:SHG), and secured 51.8 percent in acceptances.

Felix Resources(ASX:FLX) says the coalminer has reached "the pointy end" of its A$2 billion-plus internal auction process and expects to reveal the results this week. The recent financial turmoil - and an associated halving of its share price - means it is unclear whether the company will accept a takeover offer or choose to remain independent until the market recovers.
Important Corporate News

Atlas Iron(ASX:AGO) has made two new hematite discoveries at its wholly owned Pardoo project near Port Hedland in Western Australia. The two deposits, Chloe and Willy, are within Atlas's Olivia target area and contain sought-after direct-shipping ore, which requires no processing. Atlas said the deposits were at or near surface.

Oleg Deripaska, the Russian oligarch who is planning a joint venture with Leighton Holdings((ASX:LEI) in Mongolia and Siberia, has been forced to sell his 10 per cent stake in Leighton's majority shareholder, Hochtief, because of the financial crisis.