Sydney, Sep 12, 2008 AEST (ABN Newswire) - Yesterday the Australian sharemarket closed lower for the third consecutive day on concerns that Wall Street's latest banking woes would hit Australia. The four major banks deducted the most from the index with their major losses of more than 3% following Lehman Brothers' announcement overnight in New York of asset sales.
Yesterday, the benchmark S&P/ASX200 fell 91.2 points, or 1.85 per cent, to 4,814.3, while the broader All Ordinaries shed 89.9 points, or 1.81 per cent, to 4,871.5.

At 0757 AEST, the Sydney Futures Exchange's September Share Price Index contract was 43 points higher, or 0.89 per cent, to 4,878.

Overnight Wall Street equities finished almost 1.5 per cent higher. Oil, silver and gold were down, while copper was marginally higher. Light sweet crude for October delivery fell $US1.71 to settle at $US100.87 a barrel on the New York Mercantile Exchange, after dropping as low as $US100.10 a barrel.

The Australian dollar has opened stronger, surging back above $US0.8000 on speculation the Reserve Bank of Australia (RBA) will not cut interest rates in October and a positive finish on US equity markets. At the start of trade, the Australian dollar was at $US0.8071/76, up more than one US cent from yesterday's close of $US0.7954/57.

Key Economic Facts and Figures

Unemployment last month dropped by 0.2 percentage points to 4.1 per cent, the Australian Bureau of Statistics said yesterday. The surprise fall in the jobless rate in August may force the Reserve Bank to delay another interest rate cut by at least a month, just as signs emerge that consumers are beginning to believe that inflation is coming under control.

The Melbourne Institute's consumer inflationary expectations survey found the median expectation of price increases in the coming year dropped to 4.4% in September, from 4.9% in August and 5.9% in July. It declined sharply for a second straight month in September as oil prices fell further, easing concerns of a wage-price spiral.

M&A News

Iron ore prospector Murchison Metals (ASX:MMX) has sold its 9.2% stake in fellow Australian firm Midwest (ASX:MIS) to China's Sinosteel for about $135 million. Murchison said last night it would accept the takeover offer, arguing a A$135 million cash boost was in the best interests of shareholders given deteriorating financial market conditions over the past three months. Sinosteel has scored another victory in its bid to gain full ownership of Midwest Corp.

Western Australian iron ore miner Portman (ASX:PMM) is set to advise its shareholders to accept a bid by Cleveland-Cliffs Inc (NYSE:CLF) to mop up the 14.81 per cent interest in the company it doesn't already own. The US' largest iron ore producer, Cleveland-Cliffs yesterday offered A$21.50 cash for each remaining Portman share, valuing the offer at about A$560 million, and declared the bid last and final. Cleveland-Cliffs already controls Portman with an 85.19 per cent stake.

Listed real estate group Wentworth Holdings Ltd (ASX:WWM) will merge with privately owned realtor Century 21 Australia to create a business with more than 260 franchised offices nationwide and about 12,000 rental properties under management. The sole owner of C21 Australia, Charles Tarbey,will own 60 per cent of the merged company and become managing director. Wentworth shareholders will own the remainder.

Indophil Resources NL (ASX:IRN) says Stanhill will not be waiving any of its offer conditions, including the 90% minimum acceptance condition, with the offer to lapse on September 22, as a direct consequence of the decision of Lion Selection Ltd (ASX:LST) to sell a 17.83% stake in Indophil to Xstrata(LON:XTA).

Important Corporate News

ANZ (ASX:ANZ) will drop its fixed interest mortgage rates for new customers by up to 0.2 percentage points from Monday. Fixed interest home and residential investment loan rates will decline across all terms by between 0.1 per cent and 0.2 per cent, the bank said.

Gold Coast property developer Raptis Group (ASX:RPG) has begged its bankers to give it more time to sell off assets and pay down A$900 million of debt, after its largest construction project went into receivership.


Michelle Liang
Asia Business News Asia Bureau
TEL: +61-2-9247-4344

Related Companies

Xstrata PLC        
Wentworth Holdings Limited      
Sinosteel Corporation        
Raptis Group Limited      
Portman Limited     
Murchison Metals Limited        
Midwest Corporation Limited      
Lion Selection Group Limited        
Indophil Resources Nl        
Australia and New Zealand Banking Corporation        

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