Healthscope profit alert hits market

SYDNEY - Gold stocks sparkled in a broadly flat Australian sharemarket yesterday, while an earnings downgrade from hospital group Healthscope sliced nearly a quarter off its share price and shook the health sector.

The benchmark S&P/ASX 200 index dropped just 0.3 points or 0.01 per cent to 4836.4. Earlier, it peaked at 4857.8, matching the previous record high set last week.

"Healthscope's profit warning hit the market pretty hard, and it doesn't help the sentiment for companies related to the health and pathology sector," said Helen Spencer, a client adviser with Macquarie Equities.

The warning comes close on the heels of downbeat profit forecasts from retailers such as clothing group Pacific Brands, which has turned some investors cautious ahead of the half-yearly reporting season in February.

"Numbers like these are a bit of a reality check coming just ahead of the reporting season. Market has priced good news and any potential disappointment will kick in volatility," Spencer added.

The Australian share index has risen 1.6 per cent in 2006 so far, having set four successive intra-day peaks last week. It has climbed 58 per cent in the last three years.

Healthscope, Australia's second-largest private hospital group, plunged 23.6 per cent to an eight-month closing low of A$4.38 after saying its fiscal 2006 profit would land short of market forecasts.

The stock logged its biggest single-day percentage fall in 6 1/2 years. The healthcare sub-index fell 2.4 per cent.

Newcrest Mining, Australia's biggest gold miner, climbed 3.8 per cent to A$25.43 and Lihir Gold rallied 3.9 per cent to A$2.42, with both still glittering after gold prices touched 25-year peaks last week.

Qantas Airways fell 1.7 per cent to A$3.95 and Toll Holdings, the nation's top land transport group, lost 1.2 per cent to A$13.91 on concerns over the impact from rising oil prices.

Iran said world oil prices could rise if sanctions were imposed on it because of its disputed nuclear programme, while Royal Dutch Shell said it was considering evacuating all its workers from swamp areas near Nigeria's delta after recent militant attacks.

Clothing group Pacific Brands fell 2.5 per cent to A$2.35, adding to Friday's 1.6 per cent drop. UBS cut its rating on the stock to "neutral 2" from "buy 1" after Pacific forecast a 2 to 5 per cent fall in first half ebita (earnings before interest, tax and amortisation) from a year ago.

Zinifex, the world's second-biggest zinc producer, climbed 3.4 per cent to a record closing peak of A$7.96 after Deutsche Bank raised its 12-month price target to A$9.07.

Publishing and Broadcasting was up 17Ac to A$17.18 as its joint venture with Betfair UK was issued with a betting exchange gaming licence by the Tasmanian Gaming Commission.

Publisher Fairfax lost 2Ac to A$4.04.

Among other stocks, monopoly wheat exporter AWB lost 19Ac to A$6.18.

- REUTERS