KEY POINTS:
PERTH - The Australian sharemarket closed lower on profit-taking despite a positive start to the trading day.
The benchmark S&P/ASX200 index was down 23.6 points, or 0.67 per cent, at 3,499,.6 while the broader All Ordinaries index had shed 29.9 points, or 0.85 per cent, to 3,483.2.
On the Sydney Futures Exchange at 1621 AEDT, the December share price index futures contract was down 22 points at 3,529 points on volume of 32,027 contracts.
IG Markets research analyst Ben Potter said the release the Westpac-Melbourne Institute index showing a downbeat economic outlook didn't help the market.
Mr Potter said the lifting of a short-selling ban - excluding financials - also explained some of the selling pressure.
"The Westpac-Melbourne Institute index of economic activity, which indicates the likely pace of growth three to nine months into the future, came in at 1.1 per cent for September," Mr Potter said.
"This is down from 3.5 per cent in August and is the biggest drop since the mid 1980s.
"Given the data, the likelihood of a recession in 2009 seems to be increasing.
"There is the very real possibility that the first two quarters of 2009 could produce negative GDP growth."
Mr Potter said the rapidly deteriorating domestic economy meant a 100 basis point interest rate cut in December by the Reserve Bank "looks more like a necessity, rather than an option".
ANZ was a top performer among the banks, up 78 cents, or 5.98 per cent, to $13.82, Commonwealth Bank had added 83 cents, or 2.76 per cent, to $30.93, National Australia Bank had found 53 cents, or 2.77 per cent, to $19.68 and Westpac had gained 70 cents, or 4.5 per cent, to $16.25.
Mining giant BHP Billiton fell $1.00, or 4.13 per cent, to $23.20 while its takeover target Rio Tinto gave up $2.10, or 3.09 per cent, to $65.90.
Stock Move Price AMP +0.050 5.280 ANZ Bank +0.780 13.820 BHPBilton - 1.000 23.200 CBA +0.830 30.930 NAB +0.530 19.680 NewsCorp - 0.190 10.990 Polartech - 0.005 .070 Rio Tinto - 2.100 65.900 TelstraCp +0.020 4.100 WestpacBk +0.700 16.250 Woolwrths - 1.150 25.100
Wheat exporter and agricultural services group AWB reported a 137 per cent rise in annual profi, after benefiting from strong demand for fertiliser, seeds and farm chemicals as drought conditions eased.
Its shares surged 18 cents, or 6.9 per cent, to $2.79.
Babcock & Brown Ltd has decided to transform itself into a specialist infrastructure business and sell its remaining assets and operations to raise funds to pay down debt.
Shares in Babcock & Brown plunged six cents, or 19.35 per cent, to 25 cents.
Gaming firm Tatts Group says it expects a lift in earnings for the first half of this financial year and flagged growth opportunities outside the gambling realm.
Tatts shares slipped four cents to $2.47.
Energy stocks were mixed following an overnight fall in oil prices.
Woodside Petroleum was down $1.06 to $33.93 and Oil Search shed 15 cents to $4.65 but Santos bucked the trend, up seven cents to $12.82.
At 1624 AEDT, spot gold in Sydney was trading at US$737.60 an ounce, down US$2.15 on yesterday's local close of US$739.75.
Major gold stocks were mixed. Newcrest was down four cents to $18.95, Newmont gained five cents to $3.60 and Lihir Gold dipped six cents, or 3.43 per cent, to $1.69.
Among retail stocks, Coles owner Wesfarmers advanced 51 cents, or 2.8 per cent, to $18.72, rival Woolworths retreated $1.15, or 4.38 per cent, to $25.10, David Jones gave up 21 cents, or 7.34 per cent, to $2.65 and Harvey Norman lost 12 cents, or 5.22 per cent, to $2.18.
"The discretionary retailers are really feeling the pain ahead of the Christmas trading period, which is expected to be one of the weakest on record," Mr Potter said.
Among media stocks, Fairfax was down 18.5 cents, or 11.67 per cent, to $1.40, while News Corp fell 19 cents, or 1.7 per cent, to $10.99 while its non-voting scrip was six cents lower at $10.66.
The most traded stock on volume was Australia's third largest diversified miner OZ Minerals, with 71.99 million units changing hands worth a total of $46.72 million.
OZ Minerals shares were down 10 cents, or 13.7 per cent, to 63 cents.
Preliminary market turnover was 1.55 billion shares, valued at $4.41 billion, with 307 stocks up, 692 down and 313 unchanged.
- AAP
