Australian Index Down 1.9%; Hancock Sells Mines for $2.4 Billion to GVK

Marcus Jacob
16 Jun, 2011
New York City

The Australian index dropped 1.9% following the sharp decline in New York. Asian markets declined more than 1% tracking losses in Europe as focus shifted to Greek troubles. The European leaders and the ECB failed to agree on second bailout terms for Greece.

[R]4:45 PM Sydney – The Australian index dropped 1.9% following the sharp decline in New York. Asian markets declined more than 1% tracking losses in Europe as focus shifted to Greek troubles. The European leaders and the ECB failed to agree on second bailout terms for Greece.[/R]

Australian stocks closed sharply lower following overnight losses in New York on rising tensions in the euro-zone and weak economic data in the U.S.

The latest market decline was started after euro-zone leaders and the European Central Bank failed to agree on the second Greek bailout terms yesterday. The ECB is expected to take significant losses if Greek bonds are restructured.

Stocks opened lower and quickly dropped to the low in the early trading and accelerated the decline in the late afternoon.

The ASX 200 index dropped 1.9% or 87.6 to 4,479.2 and All Ordinaries index fell 2% or 88.7 to 4,546.70.

The Australian dollar decreased to US$1.053 and crude oil price edged 4.4% lower to US$95.06 a barrel.

Markets in Japan, Hong Kong and Shanghai lost more than 1% and resources prices declined sharply in Asian trading.

Greece descended into chaos as prime minister offered to resign to unite the nation and students and labor unions rioted on the streets of Athens.

Greek unemployment also surged in the first quarter to 16% from 12% in the quarter a year ago and unemployment among youth soared to 30%.

GVK, Hancock Prospecting Agree on $2.4 Billion Deal

India based GVK Power and Infrastructure agreed to acquire two thermal coal mines controlled by Hancock Prospecting for US$2.4 billion.

Two coal mines have annual capacity of 30 million tons and have combined recoverable base of 8 billion tons of coal.

GVK is expected to pay US$1.25 billion at the time of completion of the deal and may have to spend as much as US$9 billion to develop mines and logistics infrastructure.

Stock Movers

Resources, energy and financial stocks led the decline in the session. Gold declined 0.3% or US$4 to US$1,526 an ounce and crude oil fell 4.5% in New York trading.

BHP Billiton dropped 2.1% to $42 and Rio Tinto declined 2.1% to $78.40. Newcrest Mining dropped 1.7% to $36.36.

Alumina Ltd declined 3.7% to $2.10 and Iluka fell 2.1% to $17.25. Woodside Petroleum Ltd eased 2.2% to $42.41.

ANZ declined 2.2%, Commonwealth Bank decreased 2.1% and NAB fell 1.6%. Westpac dropped 2.9%. Macquarie Bank fell 1.5%.

ANZ opened its first office in Mumbai and only second Australian bank to operate in India. The bank expects revenues from Asia-Pacific, Europe and America region to grow “quiet aggressively” this year.