Australian Stocks Drop to 2-month Low; Territory Resources Soars 63%

Marcus Jacob
23 May, 2011
New York City

Australian stocks dropped the most in two months after a private survey in China estimated near flat manufacturing in May. The weak manufacturing dragged markets in Asia. Territory Resources soared on an offer from Exxaro. Elders dropped 7% after it reported a loss.

[R]6:00 PM Sydney – Australian stocks dropped the most in two months after a private survey in China estimated near flat manufacturing in May. The index declined to 10-month low. The weak manufacturing dragged markets in Asia. Territory Resources soared on an offer from Exxaro. Elders dropped 7% after it reported first-half loss.[/R]

Australian benchmark index declined the most in two months after worries of Greek sovereign debt restructuring were compounded by the latest manufacturing data from China.

The private measure of manufacturing expansion declined to 10-month low of 51.1 in May from the revised 51.8 in April. The HSBC/Markit Purchasing Managers’ index showed a near flat manufacturing for the second month in a row as Chinese companies struggle with power shortages and supply chain problems linked to Japan.

The ASX 200 index increased 89.20 or 1.9% to 4,643.00 and the All Ordinaries index declined 1.76% or 84.80 to 4,722.90.

The Australian dollar fell to US$1.052 and crude oil futures declined $2.96 a barrel to $97.14.

Stock Movers

Resources linked stocks, banks and insurance companies led the decliners.

BHP Billiton dropped 1.7% or 76 cents to $43.29 and Rio Tinto declined 1.5% or $1.21 to $78.99.

Republic Gold increased 0.1 cent to 0.5 cent in heavy trading volume of 227.37 million shares after the company cited promising results of its drilling in Bolivia.

Sims Metal Management declined 56 cents or 3.2% to $16.92 and Blue Scope Steel fell 6% or 4.1% to $1.385. Lynas Corp dropped 14 cents or 6% to $2.15.

Territory Resources soared 63% to 45 cents after South Africa based Exxaro Resources made a friendly offer that values the company at 46 cents a share or $123 million. Territory said it will suspend its negotiations with its largest shareholder Noble Group based in Hong Kong.

Elders plunged 4.5 cents or 10% to 45 cents after the agribusiness company reported first half loss of $14.6 million compared to a loss of $165.9 million a year ago. The company also guided full year out look at the bottom of the range between $7.5 million and $24.5 million.

The company declared a loss in the half on the account of one time charges and excluding these charges profit in the first half was $1 million.

Four leading banks closed lower. ANZ declined 77 cents to $22.02, Westpac fell 68 cents to $22.07, Commonwealth Bank dropped 1.4% to $51.42 and National Australia Bank declined 75 cents to $26.66.