Sydney, Feb 2, 2009 AEST (ABN Newswire) - US stocks ended with a tumble on Friday after the government reported a bleak US economy data which is fairly predictable.

On Friday, the Australian shares reversed an early fall despite the negative leads overnight on overseas markets. The benchmark S&P/ASX200 index closed up 14.5 points, or 0.41 per cent, at 3,540.7, while the broader All Ordinaries index had gained 16.8 points, or 0.49 per cent, to 3,478.1. This week traders are awaiting RBA's aggressive rate cut which is expected to announced when its board meets on Tuesday.

At 0720 AEDT on the Sydney Futures Exchange, the March SPI futures index was 64 points lower at 3,429.

Today the TD Securities/Melbourne Institute Inflation Gauge for January, the Australia Bureau of Statistics house price indices data for the December quarter and Housing Industry Association new home sales for December will be released. The Australian Industry Group/PricewaterhouseCoopers Australian Performance of Manufacturing Index for January and the Reserve Bank of Australia's index of commodity prices for December are due.

Key Economic Facts and Figures

The Reserve Bank of Australia's monthly credit report shows that demand for credit dropped 0.3 per cent in December, cutting the annual rate of growth to 6.7 per cent from 8.2 per cent the previous month. This was third consecutive monthly decline.

Economists are tipping the RBA to cut the cash rate by 75 to 100 basis points but it could follow New Zealand's lead and deliver a shock 150 basis points reduction. Australia currently has the highest cash rate in the industrialised world.

M&A News

Rio Tinto (ASX:RIO) has confirmed it is in talks with Chinalco following rumours it plans to sell up to $US8 billion of assets to the company. Rio Tinto is reportedly looking at a $US15 billion combination of asset sales.

AGL Energy (ASX:AGK) could be considering an acquisition of two Queensland coal-seam gas fields from British company BG Group (LON:BG) based on an agreement made last October. AGL had agreed to trade its stake in Queensland Gas Company (ASX:QGC) as part of BG's friendly takeover plan.

Important Corporate News

New figures from the Australian Prudential Regulation Authority showed that the Bank of Queensland (ASX:BOQ), which has been offering competitive interest rates on its savings accounts, experienced a 73.6 per cent kick in household deposits in the three months to December.

Tabcorp (ASX:TAH) has raised A$300 million from a placement of new shares to institutional investors and will raise as much as A$150 million from retail investors.

Orica (ASX:ORI) is planning to cut capital spending by more than A$100 million this year by delaying a planned Newcastle plant expansion and other projects, as mining demand for its products slows.

Newcrest Mining (ASX:NCM) said in a statement that the company planned to carry out an institutional share placement to strengthen its balance sheet, enhance its financial flexibility and take advantage of growth opportunities.

Harvey Norman (ASX:HVN) said it was considering closing 10 stores. Chairman Gerry Harvey said yesterday that small Joyce Mayne and Domayne outlets near better performing Harvey Norman stores were the ones at risk.

Henderson Group PLC (ASX:HGG)(LON:HGG) has agreed to buy rival New Star Asset Management Group PLC (LON:NSAM) for STG115 million in cash and shares to become the fifth biggest UK asset manager.


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

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