Weak Iron Ore Prices Dampen Australian Stocks, Rio Cuts Guinea Investment

Marcus Jacob
12 Mar, 2013
New York City

Australian stocks declined and closed at the low of the day after resource sector stocks fell for the second day in a row. Spot price of iron ore eased to $144 a ton. Rio Tinto said it will cut its investment in Guinea iron ore project.

[R]6:30 PM Sydney – Australian stocks declined and closed at the low of the day after resource sector stocks fell for the second day in a row. Spot price of iron ore eased to $144 a ton. Rio Tinto said it will cut its investment in Guinea iron ore project.[/R]

Australian indexes closed lower after investors sold mining stocks for the second day in a row after China reported weaker than expected retail sales and industrial production.

The ASX 200 index slumped 29 or 0.6% to 5,117.90 and the broader All Ordinaries decreased 31.49 to 5,128.56.

The Australian dollar edged down to $1.0334.

National Australian Bank monthly survey indicated business conditions in February fell to -3 from -2 in January. The firms surveyed by the bank said employment conditions improved and modest decline in profitability.

The bank also revised its economic growth forecast to 2.3% from 2% and unemployment to rise to 5.7%. The bank also lowered its expectation for the interest rate cut to 50 basis points to 2.5% from the previous estimate of 75 basis points cut to 2.25%.

Stock Movers

Mining stocks declined for the second day this week and iron ore prices in the spot market declined to US$144.1 a ton.

Rio Tinto dropped $1.18 to $62.92 and BHP slipped 15 cents to $35.67. Fortescue Metals Group declined 13 cents to $4.24.

Rio Tinto plans to cut investment in Guinea based iron ore project that may cost as much as $10 billion. The joint venture with Guinea government and China based company is financed by the World Bank subsidiary International Finance Corp.

Rio is also locked in stake negotiation struggle between the company and Mongolian government.

Woodside Petroleum decreased 64 cents to $36.75 and Santos fell 40 cents to $13.14.

Newcrest Mining dropped 27 cents to $21.68. Kingsgate slid 7 cents to $3.99 and Whitehaven Coal plunged 14 cents or 5.5% to $2.39.

Pharmaxis dropped 8% to 54.5 cents after the company reported poor results and replaced its chief executive.

David Jones Limited fell 4 cents to $2.99 and Breville Group closed unchanged at $5.70. Billabong closed unchanged at 85.5 cents and Globe International declined 2 cents or 4.9% to 39 cents.

Woolworths slumped 37 cents to $35.34. Kathmandu rose 2 cents to $1.98.

Toll Holdings slid 3 cents to $5.99, Leighton dropped 61 cents to $21.87 and Mirvac Group up 3 cents to $1.65. Lend Lease fell 9 cents to $10.29.

Westpac lowered 9 cents to $31.16, Commonwealth rose 0.6% to $70.58 and National Australia Bank fell 0.3% to $31.54 and ANZ slipped 0.5% to $29.05.

Macquarie Group slumped 35 cents to $39.14.

Woolworths decreased 1% to $35.34 and Wesfarmers slid 35 cents to $42.50.