Australian Stocks Halt 2-day Rally; QBE Plunges

Marcus Jacob
12 Jan, 2012
New York City

Australian stocks halted advances after rising two days. QBE Insurance plunged as much as 24% after the company warned 2011 net to drop between 40% and 50% on higher than expected losses linked to natural disasters.

[R]8:00 PM Sydney – Australian stocks halted advances after rising two days. QBE Insurance plunged as much as 24% after the company warned 2011 net to drop between 40% and 50% on higher than expected losses linked to natural disasters.[/R]

Australian stocks halted two days of advance and closed down after QBE Insurance issued 2011 profit warnings.

Market sentiment was also cautious ahead of the 10 billion bond offerings from Spain and Italy. European nations are expected to raise as much as 1 trillion euros in bond sale this year and banks are likely to raise additional 145 billion euros in the rights offering in the year.

Investors were also on the defensive after China reported higher than expected 4% inflation.

The ASX 200 index closed down 6.5 or 0.2% to 4,181 and All Ordinaries index decreased 4.5 to 4,238.4.

The Australian dollar edged higher 0.2% and closed at US$1.033.

Stock Movers

BHP Billiton Ltd rose 19 cents to $36.37 and Rio Tinto Ltd increased $0.54 to $64.73.

Fortescue Metals Group fell 3 cents to $4.66, Lynas Corporation Limited closed unchanged at $1.03 and Iluka Resources fell 20 cents to $16.70. Newcrest fell 17 cents to $32.58.

Iluka Resources said its production in the quarter to December declined 5% to 394,800 tons from the previous year’s quarter.

Oil Search Limited traded up 2 cents to $6.57, Santos Limited rose 1 cent to $12.75 and Woodside Petroleum decreased 5 cents to $32.37.

Commonwealth Bank of Australia decreased 3 cents to $49.91 and National Australia Bank rose 1 cent to $23.56. ANZ edged up 2 cents to $21.10. Westpac inched lower 2 cents to $20.61.

David Jones Limited closed down 2 cents to $2.43 and Wesfarmers Limited decreased 30 cent to $30.49. Harvey Norman Holdings closed up 2 cents to $1.98.

Woolworths Limited closed up 12 cents to $25.74 and JB Hi-Fi Limited decreased $0.09 to $11.67. Billabong International Ltd rose 6 cents to $1.87 and Kathmandu fell 3 cents to $1.25.

Qantas Airways Ltd closed down 1 cent to $1.50, Virgin Australia closed up 0.1 cent to 31 cents and Flight Centre closed down 11 cents to $17.52.

QBE Insurance plunged as much as 24% after the company estimated 2011 net income to fall as much as 50% from a year ago on natural disaster linked claims and weak investment returns. The insurer also said its margin is likely to be between 7% and 7.5% from the earlier estimate of 11%.

QBE Insurance Group Limited decreased $1.65 to $11.35 and Insurance Australia Group decreased 3 cents to $2.97. QBE’s one day drop was the largest since its steep fall in September 2001.

QR National rose 8 cents to $3.62.