Mining sector falls drag ASX down

The Australian share market finished lower after resource stocks fell heavily in reaction to planned tax increases for mining companies.

The benchmark S&P/ASX200 index closed down 21.9 points, or 0.46 per cent, at 4785.5, while the broader All Ordinaries index dropped 26.8 points, or 0.55 per cent, to 4807.1.

On the Sydney Futures Exchange at 4.15pm, the June share price index contract was 25 points lower at 4794 on a volume of 25,289.

CommSec market analyst Juliette Saly said the market had avoided the huge falls some had been predicting after the Henry tax review, but mining sector losses weighed down the market.

The resources sell-off came after the Government on Sunday announced its response to the Henry tax review, which will involve imposing a 40 per cent tax on profits made from non-renewable resources from July 1, 2012.

Shares in BHP Billiton finished down A$1.22, or 2.99 per cent, at A$39.53 while rival Rio Tinto slipped A$3.10, or 4.3 per cent, to A$69.

Other big miners also bore the brunt of fears about the tax changes, with Fortescue falling 19c to A$4.39 and Oz Minerals losing 3.5c to A$1.12.

Gold miners were also pushed lower, despite gold prices firming.

Shares in Newcrest Mining fell A$1.03 to A$32.06 while Lihir Gold lost 14c to finish at A$3.67.

The spot price of gold in Sydney was US$1178.30 a fine ounce, up US$5.93 on Friday's closing price of US$1,172.37.

Shares in Virgin Blue fell 7.6 per cent to finish at 55c, after it said its pre-tax profit was likely to be at the lower end of its guidance.

"All the other airline stocks were also in the red," Saly said. Qantas, which announced passenger traffic increased 11.2 per cent in March, saw its shares fall 2c to A$2.82.

Banks finished mixed, with Commonwealth Bank up 42c at A$58.93, ANZ rising 54c to A$24.74, Westpac rising 36c to A$27.56 but National Australia Bank falling 10c to A$27.90 and Macquarie Group losing 72c to A$49.57.

Energy companies were mixed, with Woodside Petroleum up 17c at A$45.57 and Oil Search up 2c at A$5.70. But gas giant Santos lost 64c, or 4.62 per cent, to A$13.20 and Origin Energy fell 25c to A$16.13.

- AAP