Fortescue and Miners Lift Australian Stocks

123jump.com Staff
27 Dec, 2007
New York City

The Australian stock market remained in positive territory buoyed by activity in resources stocks including Rio Tinto and BHP Billiton and higher commodity prices. ASX 200 index closed at 6,350.90. Primary Health Care Ltd extends its $2.1 billion takeover bid for Symbion Health Ltd by two weeks. Fortescue Metals Group rose after ten for one split. Rio Tinto''s chairman happy with deadline. Dollar stronger.

[R]3:50AM New York, 7:50PM Sydney – Mining stocks closed higher on takeover talks and rising demand from China.[/R]


ASX 200 index gained 0.4% or 27.3 to close at 6,350.90.


The preliminary market turnover in today’s session was 368.1 million shares worth $1.193 billion with 506 stocks rising, 423 closing lower, and 254 unchanged. Flinders Diamonds was the most active stocks with 21 million shares worth $2.04 million changing hands.

BHP Billiton added 1.4% and Rio Tinto rose 2.2%.

Australia''s second-largest medical centers operator, Primary Health Care Ltd extended its two weeks extension of its $2.1 billion ($1.8 billion) takeover bid for Symbion Health Ltd.

According to the company''s website the offer will now expire on January 21, 2008 instead of January 7. Primary holds a 35% stake in Symbion and a successful bid will see it becoming the largest health-care company in the country. Primary had in November offered $4.10 for each of the 80% of Symbion.

Symbion has 92 medical centers and 130 diagnostic imaging sites. Early this month, Healthscope, another shareholder said it is considering takeover bid for Symbion.

The announcement came two weeks after it scrapped its $2.8 billion cash and stock offer because of a tax ruling that reduced its value. Healthscope rose 0.2% and Symbion fell 0.3%.

Iron miner, Fortescue Metals Group Ltd''s ten-for-one share split, has to pay off for the company which has continued to dominate as the best performing member of the S&P/ASX 200 Index this year.

The iron-ore mining company has gained 19% since the split. On December 17, Chairman Herb Elliot said the split would improve liquidity and affordability.

Chief Executive Officer Andrew Forrest said the rise of the company''s stock by more than fivefold this year had boosted the fortune of largest shareholder.

Fortescue however said today that it is not aware of any information that may account for recent gains in the share price. The remark was in response to a query from the exchange.

Fortescue, which is due to start output in May, is building a $2.7 billion iron-ore operation in Western Australia. The company plans to quadruple output from the project from the initial 45 million tons. The stock added 8.9%, giving it a value of $19.9 billion ($17.4 billion.)

Rio Tinto chairman Paul Skinner informed shareholders that he is pleased that a deadline has been set for BHP Billiton to set the timetable for the proposed merger offer. In his letters to shareholders today, Skinner highlighted the group''s growth outlook and reiterated the board''s rejection of BHP Billiton''s $149 billion ($130 billion) proposal.

The UK Takeover Panel last week set a deadline of February 6th for BHP Billton to announce its intention to make a firm and formal offer for Rio Tinto or drop the offer. If BHP does not meet the deadline, it will be prohibited from making any offer for six months after February 6, unless it has the consent of the UK Takeover Panel.

BHP Billiton has unsuccessfully conducted talks with Rio Tinto for its merger plan of three BHP shares for one Rio Tinto stock.

The dollar closed stronger today as poor news on US home prices weighed down the American currency. At the close the dollar was trading at Australian $0.8764/69, up from Monday''s close of $0.8691/96.

Of the ASX 200 index shares, Compass Resource led the gainers with a rise of 8.2% followed by increases in Fortescue metals of 8.1%, in Coeut D''Alen of 7.8%, in Nexus Energy of 7.8%, and in Mincor Resources of 6.4% .

Of the ASX 200 index stocks Valad Property led the decliners with a fall of 6.5% followed by losses in DB Trust of 5.3%, Centro Reatil Group of 4.2%, in Envestra Limited of 4.1%, and 2.8% in Emeco Holdings of 2.8%.

In the energy sector was mixed. Woodside added 4%, Santos increased 3.7% and Oil Search gained 1.1%.

The gold miners were up with Newcrest adding 2.9% and Lihir putting on 2.1%.

The banking sector was mixed, with ANZ gaining 0.5%, the National Australia Bank putting on 0.5%, Commonwealth Bank of Australia up 0.7% and Westpac shed 0.3%.

The retailers were mixed, with David Jones adding 1.1% and Harvey Norman adding 0.9%, Wesfarmers down 0.5%, Woolworths shed 0.6%.

The media sector was also mixed, with Fairfax adding 0.9%, News Corp losing 0.1% and its non-voting scrip was down eleven cents to $23.96. Fairfax rose four cents to $4.69. Consolidated Media Holdings added 0.2% and Crown shed 0.2%.