Aussie stocks close down 32 points

SYDNEY - The Australian share market fell to its lowest closing level in almost two months, in a broad-based decline, on fears that the global economic slump has a way to run and that the high oil price may dent company earnings.

The benchmark S&P/ASX200 index was down 32.1 points, or 0.71 per cent, at 4508, while the broader All Ordinaries index dropped 28.4 points, or 0.62 per cent, to 4519.2, the lowest since September 7.

On the Sydney Futures Exchange, the December share price index contract was 18 points lower at 4503 points on volume of 31,779 contracts.

EL&C Baillieu Stockbroking director Richard Morrow said the US Federal Reserve's statement that it would keep rates near zero for an extended period would encourage traders to push up the price of commodities.

"The FOMC (US Federal Reserve's Federal Open Market Committee) gave a green light to traders to go hard on commodities," Mr Morrow said.

Mr Morrow said macroeconomic factors ended up deciding the direction of stocks on the day.

"It's a bit a disappointing day all round," he said.

The US dollar fell after the Fed signalled it would need to see employment growth, not just economic growth, before it would consider tightening policy.

The Fed also signalled that recovery is still some way off.

The falling US dollar helped push up the oil price to over US$80 a barrel.

Australian stocks that used the fuel were hit on the day, while some energy stocks gained.

The biggest stock on the exchange, BHP Billiton, fell 50 cents, or 1.35 per cent, to $36.44 after it temporarily suspended the construction of a new rail line in Western Australia's Pilbara region on safety concerns.

Fellow mining giant Rio Tinto declined 84 cents to $62.59.

Pallet distributor Brambles slumped 24 cents, or 3.35 per cent, to $6.93, rail freight operator Asciano lost five cents, or 3.16 per cent, to $1.53 and airline Virgin Blue dropped three cents, or 6.25 per cent, to 45 cents.

The real estate, consumer staples and telecommunications sectors all contributed to losses.

Real estate trust GPT slumped 2.5 cents to 57.5 cents and Westfield lost 14 cents to $11.86.

Telstra declined six cents to $3.17, Wesfarmers dropped 57 cents, or 2.13 per cent, to $26.20 and Woolworths retreated 24 cents, or 0.86 per cent, to $27.66.

Gold stocks fell, even after the price of the metal rose to a record overnight.

The spot price of gold in Sydney was US$1,088.10 per fine ounce, up US$4.85 on Wednesday's closing price of US$1083.25.

Among key gold stocks, Lihir declined three cents to $3.28 and Newcrest lost 28 cents to $34.11.

The major banks were mixed. ANZ fell 66 cents, or 2.9 per cent, to $22.07. The other three gained, with National Australia Bank adding two cents to $28.17, Westpac rising 10 cents to $25.89 and Commonwealth Bank gaining 48 cents to $51.85.

Some of the energy stocks shrugged off the weaker oil price, with Woodside adding 18 cents to $47.40 and Origin Energy rising 16 cents to $15.95.

In company news, Transurban Group's stapled securities jumped 19 per cent after the toll road company said it had rejected one "highly conditional" takeover move but left the door open for a sweeter bid.

The stock surged 85 cents, or 19.36 per cent, to $5.24.

Global media giant News Corporation reported an 11 per cent lift in first quarter net profit and upgraded its guidance for 2009/10 on the back of an encouraging outlook, helping its shares rise 38 cents, or 2.51 per cent, to $15.53.

News' non-voting stock rose 38 cents at $15.53.

Leighton Holdings posted profit and revenue growth in first quarter of this financial year and forecast contract wins potentially worth billions of dollars.

Department store rivals David Jones and Myer Holdings will be battling it out during the peak Christmas trading period, after both companies released strong first quarter sales results.

Myer shares dropped eight cents, or 2.08 per cent, to $3.76 and David Jones slipped 23 cents, or 4.24 per cent, to $5.19.

The most traded stock by volume was drug delivery company OBJ with 320 million shares worth $12.19 million changing hands.

Its shares fell 0.1 cent to 3.1 cents.

Preliminary market turnover was 2.64 billion shares worth $5.12 billion, with 473 stocks up, 588 down and 316 steady.

- AAP