Flat finish covers big loss for BHP

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Australia's share market has finished flat, after broader rises were offset by a big fall by market heavyweight BHP Billiton.

The benchmark S&P/ASX200 index closed down 2.1 points, or 0.05 per cent, at 4474.9 points, while the broader All Ordinaries index gained 0.7 points, or 0.02 per cent, at 4503.9 points.

On the Sydney Futures Exchange, the September share price index contract was three points higher at 4457 on a volume of 28,199 contracts.

"The major constraint on the market was the drop from BHP Billiton," said CommSec market analyst Juliette Saly.

"When you see a company that has the market capitalisation that BHP has down that much, then obviously we are going to see big falls coming through," she said.

Resources giant BHP Billiton dropped A$1.78, or 4.43 per cent, to A$38.42, after it announced it was seeking to take over Potash Corporation of Saskatchewan for US$38.56 billion.

Moody's Investor Services said BHP's credit rating would be under threat if BHP made a formal offer for Potash, the world's largest fertiliser maker.

"The fact that other stocks are managing to hold up well and prop up the overall share market means it is a pretty good outcome," Saly said.

- AAP