Australian Stocks Weak; OZ Minerals Buyback, News Corp Debt on Watch

Marcus Jacob
19 Jul, 2011
New York City

Australian stocks edged lower as the rising sovereign debt talk stress in the U.S. and Europe weakened the sentiment. News Corp credit rating may be lowered according a rating agency. OZ Minerals launches a stock buyback plan for $200 million.

[R]4:30 PM Sydney – Australian stocks edged lower as the rising sovereign debt talk stress in the U.S. and Europe weakened the sentiment. News Corp credit rating may be lowered according a rating agency. OZ Minerals launches a stock buyback plan for $200 million.[/R]

Australian stocks decreased a fraction as debt talks stall in the U.S. and the euro-zone debt contagion widen to Italy. Bond yields in Spain and Italy are inching towards a danger zone of 7% that may force these nations to abandon private markets.

News Corp continued its slide for the second week as the company faces more political headwinds that may lead to the prospect of UK newspapers division sale. Rupert Murdoch and his son James Murdoch and former head of News International Rebekah Brooks are scheduled to face UK Parliament today.

News Corp is also facing a growing list of restive investors who are increasingly looking to install professional management and replace Rupert Murdoch family control. Company director Thomas Perkins denied media reports and said that the board extends its “full support” to Murdoch.

The company is facing several multimillion dollars of fines and political backlash from the UK lawmakers for its systemic failures in journalistic ethics and UK police bribery.

The ASX 200 index decreased 3.90 or 0.09% to 4,468.1 and All Ordinaries index dropped 0.5 or 0.01% to 4,539.40.

The Australian dollar increased 0.6% to US$1.067. Spot gold in Sydney trading increased $15.50 to US$1,596.70 an ounce.

In trading, turnover increased to 2.12 billion shares worth $4.53 billion and 476 shares closed higher, 538 declined and 383 were unchanged.

Stock Movers

News Corp increased 34 cents to $14.50 after the independent director Thomas Perkins said chief executive Rupert Murdoch has the “full support” of the board and dismissed the reports that he is likely to be replaced.

However, several long term investors are unhappy with the company’s dual class stocks and are indeed demanding change of leadership at the company.

Separately, S&P warned that the company’s debt rating outlook may be cut.

Real estate development companies were lower in trading today. Westfield Group decreased 17 cents to $8.20 and GPT Group fell 5 cents to $3.

BHP Billiton decreased 23 cents to $42.62 and Rio Tinto fell 27 cents to $81.33.

OZ Minerals added 36 cents to $13.32 after the company launched $200 million stock buyback and kept its current year gold and copper production estimates.

The company also said its cash cost for copper declined in the second quarter to 56.1 cents a pound compared to 70.3 cents a pound in the first quarter. The company retained its annual copper production outlook between 100,000 and 110,000 tons.

Woodside Petroleum added 67 cents to $38.92 after it reported revenues increase in the June quarter on the rise in commodities prices.

Santos Limited gained 37 cents to $13.11 a day after the company launched an all-stock offer to acquire Eastern Star Gas for $950 million.

Tabcorp added 16 cents to $3.26 after the company acquired off-track betting rights in Victoria for the next 12 years for $410 million.

The other license bidder increased 1 cent to $2.33.