Australian stocks: Index surges towards 4000

MELBOURNE - Australian shares surged towards the 4000 mark yesterday as funds shifting out of Rupert Murdoch's News Corp moved into heavyweight Australian stocks ahead of the media giant's entry into the S&P 500 index.

The S&P/ASX 200 rose 30.9 points, or 0.78 per cent, to a record close at 3975.1.

Heavy trade in News Corp pushed its shares up 1.9 per cent to A$24.48, in line with gains on Wall St on Wednesday, with US fund managers building stakes in the group before it is included in the S&P 500 following Wall St's close tomorrow.

At the same time, News Corp's phased exit from the Australian benchmark index, which begins from the close today, fuelled a shift of index-linked funds out of News Corp into some of the Australian market's other heavyweights.

The winners included BHP Billiton, which gained 1.5 per cent, ANZ Banking Group and shopping mall giant Westfield Group, both up 1.2 per cent, and top retailer Coles Myer, which climbed 2.4 per cent.

Beer leader Foster's Group finished 1.8 per cent higher after touching A$5.63, its highest since June 2001.

"Some of the moves are aggressive without much stock-specific news flow to support them, so there appears to be some reweighting in anticipation of the index changes tomorrow," said BT Financial Group portfolio manager Troy Angus.

Dealers said the market jump was partly driven by the expiration of December share price index futures.

"General sentiment wants this market to trade 4000 before the New Year, so there's a push to get it there," said one dealer.

On the down side, veterinary drug-maker Chemeq slumped 32 per cent to a three-year low of A$1.25 after its chief financial officer quit and the company said it had run into start-up problems at a manufacturing plant in Western Australia.

Women's clothing chain Millers Retail slid 7 per cent to its lowest since October 1999 on further concerns about its sales relative to the major retailers.

Angus said latest debit card figures from Cashcard Australia suggested retail spending would have to pick up sharply in the next few weeks to meet expectations built into most retailers' share prices.

"The next couple of weeks will be very telling for retail sales and the strength of the domestic market, and the strength we're seeing in the equity market," said Angus.

Among the banks, ANZ rose 25c to A$20.38, Westpac 13c to A$19 and the Commonwealth Bank increased 19c to A$31.74. The National Australia Bank bucked the trend, falling 13c to A$28.60.

- REUTERS