Australian stocks: Market closes slightly lower

SYDNEY- The Australian share market has closed slightly lower, with losses by the major miners dragging the main indices into the red.

At 1615 AEST the benchmark S&P/ASX200 index was down 7.7 points, or 0.2 per cent, at 3,769 points, while the broader All Ordinaries lost 5.8 points, or 0.16 per cent, to 3,722.3.

On the Sydney Futures Exchange, the June share price index contract was flat at 3,767 on a volume of 17,279 contracts.

The market opened in positive territory but backtracked on losses by the two biggest resources stocks, Rio Tinto and BHP Billiton.

Rio's new chairman Jan du Plessis told the company's annual general meeting in Sydney that completing the Chinalco deal would be a priority.

Local shareholders voiced their concerns over the controversial Chinalco deal at the meeting, just as investors did at last week's London AGM.

Rio ended down $1.22, or 2.06 per cent, at $57.90, while BHP shed 53 cents, or 1.59 per cent, to $32.88, amid speculation - quashed by the miner - the two companies had entered a new round of takeover talks.

A fall in a measure of inflation at the wholesale level also weakened sentiment, IG Markets institutional dealer Chris Weston said.

Producer prices fell by 0.4 per cent in the March quarter, the largest fall in a quarter since June 2003.

"Producer prices fell for the first time in six years with a very soft result providing an argument for further monetary easing which fuelled much of the selling," Mr Weston said.

In the financial sector, National Australia Bank lost nine cents to $22.05, ANZ gained 35 cents to $17.05, Commonwealth Bank fell 50 cents to $36.50 and Westpac rose four cents to $20.26.

Mr Weston said the market seemed to have settled on a target for its recent rally, with investors selling off stocks once it reached 3,800 points in the past two sessions.

"With so much recent positive variables priced into markets it is hard to see where the next bit of good news to take us higher will come from," he said.

"Many feel that downside risks outweigh the short-term upside from where are now."

Making news, Wesfarmers says contract prices for metallurgical coal exports from its Curragh mine in Queensland will fall sharply this year but will maintain "market price relativity".

Shares in the diversified company, which also owns Coles, dropped 85 cents, or four per cent, to $20.40.

Rival Woolworths gained 76 cents to $26.64.

Port and rail operator Asciano was the market's biggest mover, gaining 38.5 cents, or 33.19 per cent, to $1.545.

The debt-laden company said it had received bids for some or all of its assets, with the board to consider the offers later this week.

Onesteel shares fell sharply after the end of trading halt in which it raised $584 million from institutional investors through a share sale.

Onesteel shares lost 11.29 cents, or 4.82 per cent, to $2.23.

Iron ore miner Fortescue Metals Group said it is in early-stage talks with various parties regarding future investment and financing.

Its shares gained 22 cents, or 8.7 per cent, to $2.75.

Energy stocks were higher, with Woodside Petroleum up 19 cents at $38.30, Santos 38 cents stronger at $16.83 and Oil Search steady at $5.14.

At 1628 AEST the spot price of gold in Sydney was trading at US$867.60 an ounce, down US$7.65 on Friday's local close of US$875.25 an ounce.

Gold miners ended lower as a result, with Newcrest Mining down 19 cents at $27.84 and Lihir Gold off two cents at $2.79.

Telstra gained two cents to $3.21 while Optus parent Singapore Telecommunications fell four cents to $2.38.

The most traded stock by volume was Focus Minerals Ltd with 92.65 million shares trading hands collectively worth $2.63 million, after it appointed a contractor to re-commission a West Australian treatment plant.

Focus Minerals shares gained 0.3 cents, or 11.54 per cent, to 2.9 cents.

Preliminary market turnover was 1.59 billion, worth $2.98 billion, with 492 stocks up, 503 down and 280 unchanged.

- AAP