Australian stocks: Market weaker in light trading

MELBOURNE - The Australian share market closed weaker in light trading as investors showed caution after recent gains and the digestion of Tuesday's federal budget.

At 1615 AEST, the benchmark S&P/ASX200 index was down 21.1 points, or 0.54 per cent, at 3856.1, while the broader All Ordinaries index also dropped 21.1 points, or 0.55 per cent, to 3842.5.

On the Sydney Futures Exchange at 1615 AEST, the June share price index contract was 16 points lower at 3853 on volume of 22,445 contracts.

IG Markets research analyst Ben Potter said there was little apparent fallout from Tuesday night's federal budget showing up in the market.

"We are seeing the discretionary sector like Harvey Norman and JB Hi Fi suffering a bit because some brokers said next year is likely to see a lot less stimulus from the government," he said.

Harvey Norman finished the day down nine cents at $3.11 and JB Hi-Fi ended three cents weaker at $13.26.

"It has been a battle all day between the bulls and the bears ... there is a very, very low volume on the market, which is a good thing when you see down days," said Mr Potter said.

"The market has had a very good run for the past two months," he said.

"We are getting a bit of a pull-back, we are not getting much in terms of points."

Banks ended the day mixed after Commonwealth Bank said it would cut its final 2009 dividend by 25 per cent.

Despite this, Commonwealth shares rose 14 cents to $36.74, and Westpac put on 22 cents to $20.60.

Shares in National Australia Bank finished down 14 cents at $21.72, while ANZ was down 26 cents to $15.71 and Macquarie Group fell $1.10 to $34.75.

"That (Commonwealth Bank news) was expected, all the other banks have done it (cut dividends) between 20 to 25 per cent," Mr Potter said.

"The broad numbers were in line with estimates. I think probably in a rising market they would probably be up a bit more than they are now," he said.

The mining sector had a fairly strong day but Rio Tinto fell $3.23, or 4.72 per cent to $65.25, on speculation it may seek an alternative to a proposed US$19.5 billion (A$25.50 billion) investment deal with Aluminum Corporation of China (Chinalco).

"There was a meeting in London of shareholders last night which coincided with a note out from Barclays (investment bank) that said the terms of the agreement with Chinalco are very shareholder unfriendly," Mr Potter said.

Shares in global miner BHP Billiton strengthened 12 cents to $34.43.

Among the gold miners Newcrest put on 45 cents to be $30.15 and Newmont increased 21 cents to $5.80, while Lihir Gold rose four cents to $3.10.

The spot price of gold was US$927.60 per fine ounce at 1639 AEST, up US$14.55 on Tuesday's local close of US$913.05.

Energy stocks also finished the day mixed, with Woodside rising eight cents to $44.82 but others in the sector falling.

Santos lost $1.31 to $14.47, Origin Energy was 17 cents weaker at $16.01 and Oil Search declined four cents to $5.20.

"Santos issued stock, which has come back onto the market today ... They are really weighing on that energy sector," Mr Potter said.

There was speculation on Wednesday that construction and mining contractor Macmahon Holdings could be considering a share placement to Leighton Holdings Ltd, which holds a 16.9 per cent stake in the company.

Macmahon shares were in a trading halt and last traded at cents.

Leighton Holdings stocks ended the day down 4.85 per cent, or $1.24, at $24.35.

Grains marketer GrainCorp's share price rose 35 cents, or 5.1 per cent, to $7.20, after it upgraded its full year profit guidance.

Retailers ended the day mixed, with Woolworths down 25 cents to $25.50, Wesfarmers up nine cents at $22.90 and David Jones two cents stronger at $3.83.

The media sector had a poor day with Fairfax Media falling 4.5 cents to $1.075 and News Corp down 56 cents at $13.79, while the company's non-voting scrip fell 59 cents to be $11.80.

Consolidated Media fell five cents to $2.33.

The most traded stock by volume was Admiralty Resources, with about 217 million shares changing hands for $7.68 million. Preliminary market turnover reached 2.36 billion shares worth $4.51 billion, with 561 up, 488 down and 301 unchanged.

- AAP