Australian stocks: Market little changed

SYDNEY - The Australian share market closed steady after being dragged back from early highs by resource stocks including Rio Tinto as political opposition intensified over the planned $19.5 billion investment by China's state-owned Chinalco.
At 1615 AEDT, the benchmark S&P/ASX200 was down 5.6 points, or 0.16 per cent, at 3446.3, while the broader All Ordinaries declined 7.2 points, or 0.21 per cent, to 3386.2.

On the Sydney Futures Exchange the March share price index contract was 29 points lower at 3450 on a volume of 89,254 contracts.

"We were let down by resources and particularly Rio," Patersons Securities senior private client adviser Marcus Padley said.

"There's an expectation that the Chinalco deal is in danger.

"It looks like they might have to rejig the deal and include a capital raising."

Rio slumped $4.51, or 8.67 per cent, to $47.50 while rival BHP Billiton, the biggest stock on the market, lost 82 cents, or 2.54 per cent, to $31.08.

The Chinalco deal is facing a mounting political backlash that has led to independent senator Nick Xenophon on Wednesday joining National senate leader Barnaby Joyce in expressing concerns about the move.

In a deparate development, Rio appointed non-executive director and British American Tobacco chairman Jan du Plessis as the global miner's new chairman, replacing incumbent Paul Skinner in April.

Iron ore miner Fortescue Metals also fell, losing 15 cents, or 6.2 per cent, to $2.27.

Newcrest added to the slump, after chief executive Ian Smith says the gold miner is searching for merger and acquisition opportunities over the coming year. The shares lost 73 cents, or 2.27 per cent, to $31.37.

Lihir gained five cents to $3.09, while Sino Gold fell 25 cents to $5.17.

The spot price of gold was trading at US$910.95 an ounce at 1618 AEDT, down US$9.15 on Tuesday's local close of US$920.10 an ounce.

The local equities market had gained as much as one per cent after a positive lead from Wall Street where an upbeat report on US home construction, pushed the Dow Jones Industrial Average 2.48 per cent higher to close at 7,395.70.

That flow-through of positive sentiment helped most financial stocks, including the big four Australian banks.

"The top performing stocks have been financials," Mr Padley said.

"There's been a dissipation of the fear factor."

National Australia Bank added 26 cents to $19.19, Commonwealth Bank put on 23 cents to $32.70 and Westpac rose three cents to $17.74.

ANZ gained 37 cents to $14.80 after announcing it will absorb the separately managed specialist asset finance business Esanda Finance Corporation Ltd into the bank.

QBE, Australia's biggest insurer, rose 59 cents to 18.70 and Macquarie Group, the largest investment bank, gained 78 cents, or 3.57 per cent, to $22.63.

By contrast Westfield Group, the biggest property trust, fell 38 cents, or 3.61 per cent, to $10.15.

AXA Asia Pacific Holdings jumped 22 cents, or 6.83 per cent, to $3.44 after its trading halt was lifted and the group said it had raised $500 million from a placement of shares to institutional investors.

In other company news, upmarket retailer David Jones gained 21 cents, or 8.43 per cent, to $2.70 after lifting its first half profit by 2.4 per cent and affirming its guidance, saying it is well prepared for the economic downturn.

The Takeovers Panel has upheld a claim by the major shareholder of Gloucester Coal that the coal miner's proposed takeover of Whitehaven Coal is anti-competitive. Gloucester gained 16 cents, or 3.48 per cent, to $4.76 while Whitehaven fell 7.5 cents, or 4.75 per cent, to $1.505.

Fairfax Media gained seven cents, or 7.53 per cent, to $1 after it announced a new organisational structure for the group that will better align its online and print media assets.

PMP is still on track to announce a new chief executive next month, a spokesman for the printing and distribution company said. PMP gained 2.5 cents, or 8.33 per cent, to 32.5 cents.

Nexus Energy placed its $1 billion plus Crux oil project on hold in Western Australia and extended a voluntary suspension of its shares as the company seeks vital funding to keep afloat after an asset sale fell through. The stock last traded at 38 cents.

Agribusiness AWB said it expects to reduce net corporate debt by at least $200 million by the end of September.

The stock gained 6.5 cents, or 5.56 per cent, to $1.235.

Telstra was the most traded stock, with 147.2 million shares changing hands, worth $446.5 million.

The telco was steady at $3.03.

Market turnover was 1.85 billion shares worth $4.81 billion, with 534 stocks rising, 388 falling and 275 unchanged.

- AAP