Sydney Gains 1%; Rate Decision Tomorrow

Chandrasekhar Atreya
04 Oct, 2010
New York City

The benchmark index in Australia gained 1.1% after falling for four days in a row. RBA is set to announce its rate decision after two-day meeting that ends tomorrow. Australian dollar reaches a two-year high against the greenback. Australian regulators approve AWB purchase by Canada based Agrium.

[R]6:00 PM Sydney, Australia – The benchmark index in Australia gained 1.1% after falling for four days in a row. RBA is set to announce its rate decision after two-day meeting that ends tomorrow. Australian dollar reaches a two-year high against the greenback. Australian regulators approve AWB purchase by Canada based Agrium. Ivanhoe completes the acquisition of Osborne project from Barrick Gold.[/R]

Shares in Australia snapped a four-day losing streak after a quite day of trading drove investors to the safety of banks and miners and lifted the index above 1%.

The ASX 200 gained 1.01% or 46.1 points to close at 4,625.30.

A private gauge of inflation in Australia showed only a modest rise of 0.1%, while underlying price pressures remained subdued. Reserve Bank of Australia is scheduled for interest rate meeting on Tuesday.

Federal Treasurer Wayne Swan said banks could not justify raising rates above the official cash rate if the RBA increases its rate when it meets Tuesday.

The Australian dollar rose against 13 of its 16 currencies and also reached its two-year high against the U.S. dollar on expectation the Reserve Bank of Australia will increase rates tomorrow.

The Australian dollar closed at 97.19 U.S. cents and traded near its recent high of 97.51 U.S. cents.

Australian Foreign Investment Review Board gave clearance to Canada based Agrium for its proposed $1.24 billion takeover of agribusiness AWB. AWB had entered into an agreement to buy all of AWB shares and performance rights for A$1.50 each.

“FIRB has notified that there are no objections to the proposed acquisition in terms of the Australian government’s foreign investment policy,” AWB said Monday.

Ivanhoe Australia said Monday it had completed the acquisition of the Osborne copper and gold project from Canada’s Barrick Gold Corp. Ivanhoe said in May, when it had agreed to buy the project for $17.5 million plus a small royalty that the purchase would enable the firm to start production at the nearby Merlin project sooner than expected.

Emerging lithium producer Galaxy Resources said Monday it will raise $30 million from a Chinese investor to ramp up its operations at Mt Cattin mine in Western Australia and processing plant in Jiangsu in China.

Galaxy said it had agreed in principle to issue a $30 million convertible note to an investor from China, subject to board approval.

Resource News

Frontier Resources said it had reports of “highly encouraging results” of high-grade gold, silver, copper and molybdenum from its prospects in Papua New Guinea.

Leyshon Resources as part of its broader strategy to acquire coal assets in western China and Mongolia, made applications for a large area of exploration licenses in Mongolia.

Malagasy Minerals finalized a deed of termination and release with Madagascar Resources under which the parties agree to terminate the merger implementation agreement of May 25.

Fortescue Metals said Monday it achieved a record export output in September and was on track to achieve 55 million tons a year of production with the current infrastructure.

Talisman Mining said Monday it struck agreement to sell its iron ore assets, allowing it to focus on copper and gold exploration in Western Australia’s emerging Bryah Basin region.

Gainers & Losers

Atlas Iron Ltd led gainers in the ASX with a gain of 5.6% to A$2.45 followed by Karoon Gas Australia Ltd 5.57% to A$8.53, CabCharge Australia Ltd 4.91% to A$5.77, Isoft Group Ltd 4.17% to A$0.125 and AMP Ltd 3.13% to A$5.28.

Paladin Energy Ltd led decliners in the index with a drop of 4.79% to A$3.58 followed by Platinum Australia Ltd 3.79% to A$0.635, Murchison Metals Ltd 2.98% to A$1.63, Lynas Corp Ltd 2.96% to A$1.31 and Macquarie Atlas Road Group 2.96% to A$1.475.