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Sydney, Jan 8, 2009 AEST (ABN Newswire) - Overnight Wall Street fell sharply on a series of bleak profit outlooks from key companies and shock figures on unemployment.

Yesterday offshore markets helped lift the Australian share market to a two-month high. Investors started to return as they were increasingly confident that the market may have passed the worst situation. The benchmark S&P/ASX200 index was up 37.0 points, or 0.99 per cent, at 3,779.7, and the broader All Ordinaries index added 39.0 points, or 1.06 per cent, to 3,728.2. The weaker commodities prices and performance of US stocks may send the local market down.

At 0819 AEDT on the Sydney Futures Exchange, the March Share Price Index futures contract was 71 points lower at 3,704. The Australian dollar has opened 1.73 per cent lower as data showing the US jobs market is weakening further caused equities on Wall Street to slump.

Oil prices fell overnight after a much larger than expected energy stockpile buildup in the United States. The benchmark contract, light sweet crude for delivery in February, slumped $US5.95 dollars to close at $US42.63 dollars a barrel on the New York Mercantile Exchange.

Key Economic Facts and Figures

New homes sales fell by 1.1 per cent in November after a 3.1 per cent rise the month before, the Housing Industry Association's (HIA) said. A slowing economy and tougher access to credit led investors to postpone purchases of homes in the second half of 2008.

Retail sales rose 0.4 per cent in November in seasonally adjusted terms, figures from the Australian Bureau of Statistics (ABS) show, far above the market's forecast of a 0.3 per cent fall. An economist said the result which is better than expected could slow RBA's pace of interest rate cut.

The Australian Industry Group-Housing Industry Association performance of construction index eased 1.1 points to 30.9 December to an all time low, from 32 points in November. The results shows that the construction industry remains under substantial pressure as the economic and financial crisis continues to adversely affect market confidence and demand for building projects

The Australian Bureau of Statistics will issue its international trade in goods and services data and its Building Approvals Data for November.

M&A News

CBH Resources(ASX:CBH) broke four weeks silence and declared its hostile scrip bid for Perilya(ASX:PEM) was a superior option to the target's planned A$45.5 million placement to the Chinese smelter Zhongjin Lingnan(SHE:000060). Perilya objects to CBH's takeover proposal citing the predator's high debt levels and would prefer the cash injection from Zhongjin.

Bendigo and Adelaide Bank Ltd (ASX:BEN) has bought a A$1.5 billion margin lending loan portfolio from Macquarie Group Ltd (ASX:MQG) for A$52 million. The purchase means Bendigo and Adelaide Bank will consolidate its position as one of the three largest providers of margin lending products in Australia, with more than A$3.6 billion of loans under management.

Important Corporate News

As part of its plan to shed 14,000 workers worldwide, Rio Tinto (ASX:RIO) yesterday confirmed the 50 contractors would be sacked -- and that it was likely to happen this week. The rest of the company's workforce is likely to learn its fate in the next month.

National Australia Bank(ASX:NAB) has raised A$3.51 billion from U.S. investors in the biggest Australian government-guaranteed bond deal.

Australian-listed Aditya Birla Minerals Ltd(ASX:ABY) has placed its Mt Gordon copper mine in the northeastern state of Queensland on care and maintenance because of low copper prices, the company said on Wednesday.

Melbourne tollroad operator ConnectEast Group(ASX:CEU) said its gross daily toll revenue grew 2.6 per cent in December. The average gross daily toll revenue for December was A$451,603, compared with A$439,986 in November.

Babcock & Brown(ASX:BNB) warns that its A$2.6 billion net asset position in June has been decimated. The investment firm is in trading halt while waiting for a complete response from its lenders to its capital restructure proposal.

Otto Energy Limited (ASX:OEL)(PINK:OTTEF) is pleased to advise it has executed agreements formalising the farm-in into the Santa Rosa exploration licence in Argentina and has approved the Exploration Work Program and Budget totalling US$4.1 million with the view to start drilling in H1 2009.

Contact

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


Related Companies

Shenzhen Zhongjin Lingnan Nonfemet Com.        
Rio Tinto Limited          
Perilya Limited          
Otto Energy Limited         
National Australia Bank Limited         
Macquarie Group Limited        
ConnectEast Group        
CBH Resources Limited        
Bendigo and Adelaide Bank Limited         
Babcock & Brown Limited        
Aditya Birla Minerals Limited      

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