Sydney, Nov 20, 2008 AEST (ABN Newswire) - US stocks sank overnight on fears that the US car industry could collapse and the Federal Reserve admitted the potential for a long recession. Dow was down under 8000 for the first time since 2003.

On Wednesday, the Australian sharemarket closed lower despite a positive start led by rally on Wall Street overnight. The benchmark S&P/ASX200 index was down 23.6 points, or 0.67 per cent, at 3,499.63 while the broader All Ordinaries index shed 29.9 points, or 0.85 per cent, to 3,483.23. The market has lost half its value, or A$804 billion in just over one year. Analysts say that the overall trend may not change without catalyst for the market to go up while the overseas will pull the Australia market lower each time it seems to hit the bottom.

At 0808 AEDT, the December Share Price Index futures contract on the Sydney Futures Exchange was down 165 points at 3,379.

The Australian dollar opened firmer today as an appreciation in the euro helped the local unit hold its ground against the US currency, even as Wall Street continued to slide. At 0700 AEDT, the Australian dollar was trading at $US0.6453/57, up by 0.1 per cent from Wednesday's close of $US0.6444/49.

Oil prices dropped on Wednesday, with Brent crude falling to close to $50 a barrel, as weak energy demand continued to plague the market. On the New York Mercantile Exchange light sweet crude for December delivery fell 77 cents to $US53.62 a barrel. It earlier fell to $US53.30 dollars, its lowest point since January, 2007.

Key Economic Facts and Figures

Reserve Bank governor Glenn Stevens said lowering interest rates alone might not be enough to rekindle consumer demand and business confidence. The Reserve Bank has given the green light for federal and state governments to go into deficit to support public projects that boost demand.

The Westpac-Melbourne Institute leading index, which measures the likely pace of economic activity three to nine months in the future, shrank to 1.1 per cent in September. The drop from August's 3.5 per cent pace was the biggest monthly fall since the mid-1980s.

Australian Bureau of Statistics (ABS) figures show just over 80,000 light vehicles were sold last month, down from almost 90,000 at the same time last year. The biggest falls in sales were in New South Wales, Queensland and Tasmania.

Today, the Reserve Bank of Australia releases its November bulletin.

M&A News

Babcock & Brown(ASX:BNB) admitted to confine its operations solely to infrastructure and to sell the other 50 per cent of its assets in the hope of reducing its A$3.1 billion debt by 50 per cent over the next three years. Last night a syndicate of 25 banks including Australia's top four financiers locked in an emergency meeting to decide Babcock's fate. The group, which owes about A$50 billion across its businesses, will also split in two to focus solely on infrastructure investment and add more assets to a fire sale.

Extract Resources (ASX:EXT) and Kalahari Minerals plc(LON:KAH) have terminated the restructure implementation agreement on fears the deal would give Rio Tinto (ASX:RIO) effective control of the merged mining company. Rio Tinto has acquired a 14.9% stake in Kalahari and a 13.1% stake in Extract. Following the merger Rio would have held a 19.8% stake in the merged entity.

Australia's Woodside Petroleum(ASX:WPL) has announced its interest in purchasing a stake in the ExxonMobil(NYSE:XOM) led PNG LNG project. ExxonMobil operates the project with a 41.5% stake while Oil Search(ASX:OSH) owns a 34% stake, and Australia's Santos(ASX:STO) a 17.7% stake.

Important Corporate News

OZ Minerals Ltd(ASX:OZL) has warned that its profit will be less than the combined result last year by Oxiana Ltd and Zinifex Ltd, the entities that merged in July to form the new company. The company said it could not give a market guidance about expected profit except to say it would be affected by lower commodity prices and higher production costs.

The traffic camera operator Redflex Holdings(ASX:RDF) told shareholders that not only are there several parties about to begin evaluating the company for a takeover, it is on track for a 40% pre-tax profit gain this year.

Regional Express(ASX:REX) yesterday reaffirmed its guidance for the remainder of the financial year, saying it expected a net profit in line with last year's profit of A$24.3million. Rex posted an 18.6% dip in net profit to A$4.8 million in the three months to September, as higher fuel costs ate into its earnings.

Agribusiness group GrainCorp(ASX:GNC) is confident it will return to profit next year after the drought pushed it nearly A$20million into the red last financial year. The company released its results with an after-tax loss of A$19.9million.

Gaming giant Tatts Group(ASX:TTS) says its lottery revenue has been dented by competition from rival Greek company Intralot. Tatts said despite the loss in revenue in the first quarter the company had started the year well and shareholders could expect higher earnings a share in the coming year.

1. Related Stocks - Mid Market (AEST 1230)
----------------------------------------------------
Code   % Change   Volume     Turnover      Low  High
----------------------------------------------------
ASX:RIO  -9.1    2,095,611  $126,972,501 5916 6138
ASX:WPL  -6.95   1,348,826  $45,881,001  3150 3273
ASX:OZL  -11.11  50,537,271 $27,851,084  52   56.5
ASX:TTS  -.8     3,508,324  $8,371,969   230  245
ASX:BNB  -20     314,000    $1,557,000        
ASX:EXT  -11.91  314,036    $280,914     85   90
ASX:GNC  -6.99   30,933     $183,707     581  610
ASX:REX  +5.55   156,360    $148,976     90   98
ASX:RDF  -2.43   46,151     $149,063     320  328
2. Top 10 ASX on Turnover - Mid Market (AEST 1230)
----------------------------------------------------
Code   % Change   Volume     Turnover      Low  High
----------------------------------------------------
ASX:BHP  -6.16   13,116,272 $290,887,833 2111 2199
ASX:NAB  -2.28   7,019,331  $132,852,254 1861 1929
ASX:WBC  -2.83   8,104,448  $128,817,733 1517 1581
ASX:RIO  -9.18   2,099,978  $127,233,877 5916 6138
ASX:TLS  -2.68   28,114,129 $112,554,227 396  405
ASX:CBA  -4.13   3,258,450  $96,879,596  2910 3004
ASX:ANZ  -4.63   7,084,804  $95,145,596  1303 1337
ASX:CSL  -5.6    1,853,193  $60,607,183  3112 3400
ASX:WOW  -2.07   2,205,734  $54,146,540  2410 2484
ASX:QBE  +.98    2,116,167  $46,512,148  2103 2298

Contact

Michelle Liang
Asia Business News Asia Bureau
Tel: +61-2-9247-4344
Email: michelle.Liang@abnnewswire.net


Related Companies

Woodside Petroleum Limited         
Tatts Group Limited        
Santos Limited         
Rio Tinto Limited          
Regional Express Holdings Limited        
Redflex Holdings Limited       
Oz Minerals Limited          
Oil Search Limited        
Kalahari Minerals Plc       
GrainCorp Limited        
Exxon Mobil Corporation       
Extract Resources Ltd             
Babcock & Brown Limited        

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