U.S. Stocks Fell on Inflation Fears

123jump.com Staff
06 Feb, 2008
New York City

U.S. stocks edged lower after trading down, up, and dow at close. The talks of inflation fighting from the Philadelphia Fed President weighed on the market. Earlier, in the mornig, market digested a drop in oil price on the weekly crude oil inventory report and a rise in productivity in the last quarter and in 2007. Earnings from Disney and Time Warner lifted the sentiment. Toll Brothers reported senventh quarter of declining earnings.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – U.S. stocks edged lower after trading down, up, and down in the session. CME Group operator of Chicago Mercantile Group fell 18% after a possible delay in a merger with Nymex.[/R]

European Markets

In London FTSE 100 Index closed higher 7.40 or 0.13% to 5,875.40, in Paris CAC 40 Index increased 39.57 or 0.83% to close at 4,816.43 and in Frankfurt DAX index higher 82.26 or 1.22% to close at 6,847.51. In Zurich trading SMI increased 48.04 or 0.64% to close at 7,565.45.

North American Markets indexes

Dow Jones Industrial Average lost 65.03 or 0.53% to a close of 12,200.10, S&P 500 closed down 10.19 or 0.76% to 1,326.45, and Nasdaq Composite Index traded down 30.82 or 1.33% to a close of 2,278.75.

In Toronto TSX Composite closed down 64.75 or 0.50% to close at 12,867.20.

Of the 30 stocks in Dow Jones Industrial Average, 8 closed higher, 22 closed lower, and none were unchanged.

General Motors led the decliners in the index with a fall of 2.9% followed by losses in Boeing of 2.2%, in Hewlett Packard of 1.9%, and in Microsoft of 1.9%. The Walt Disney led the gainers in the index with a rise of 4.7% followed by increases in Caterpillar of 0.7%, in Coca Cola of 0.5%, and in Procter & Gamble of 0.4%.

Of the stocks in S&P 500, 168 closed higher, 327 fell, and 5 were unchanged. Three stocks rose more than 3% and two hundred and seventy one stocks fell more than 3%.

CME Group led the decliners in the index with a fall of 18% followed by losses in Harman International 15.4%, in Micron Technology of 10.8%, and in Centex of 8%. JDS Uniphase led the gainers in the index with a rise of 26% followed increases in Polo Ralph Lauren of 10%, in Thermo Fisher 7.5%, and in Tyco Electronics of 6.6%.


South American Markets Indexes

In Latin Markets Brazil led the decliners in the region with a loss of 3.46% followed by decreases in Colombia of 2.65%, in Argentina of 0.74%, and in Mexico of 0.56%.

Chile gained 1.1% and Peru advanced 0.74%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 646.26 or 4.70% to 13,099.24, in Hong Kong Hang Seng index decreased 1339.24 or 5.40% closed to 23,469.46, in Australia ASX 200 index lower 183.50 or 3.17% to close 5,609.40.

Thailand SET index closed lower 13.05 or 1.62% to 794.63, and Indonesia JSE Index edged decreased 65.16 or 2.41% to 2,639.09. Sensex index in India decreased 523.70 or 2.81% to 18,139.49. Market of South Korea was closed today.


Bond Yields decreased on 10-year U.S. bonds to 3.59% and on 30-year bonds gained to 4.36%.

[R]Commodities, Metals, and Currencies[/R]

Crude oil fell $1.26 to close at $87.15 per barrel for a front month contract, natural gas increased 5 cents to $7.99 per mBtu, and gasoline futures decreased 5.41 cents to close at 225.69 cents per gallon.

Gold increased $14.00 in New York trading to close at $904.00 per ounce, silver closed down 19 cents to $16.53 per ounce, and copper for front month delivery increased 7.50 cents to 328.70 per pound and in London copper futures decreased $127.00 to $7,136.00.

Dollar edged higher but traded near record lows against euro to $1.4622 and edged lower against yen to 106.45.


[R]2:00PM New York, 7:00PM London – Stocks in the UK traded in a tight range after consumer confidence report showed a decline. British Sky Broadcasting reported 11% rise in revenue in the first half of fiscal 2008 and increased dividend.[/R]

Market Sentiment

Stocks in London closed up on stronger earnings report from British Sky Broadcasting, which helped offset a negative report on the jobs market.

In London trading FTSE 100 rose 0.13% or 7.4 to 5, 875.40.

Of the FTSE 100 stocks traded, 66 gained, 34 declined, and 2 were unchanged. British Sky Broadcasting led advancers with a rise of 7% after the company reported full-year profit will be at £740 million and maintained its target of 10 million pay TV customers by 2010.

Economic Data

The Recruitment and Employment Confederation reported today on its web site in its January’s Report on Jobs, that the UK labour market continued to slow in January 2008.

The report noted that slow growth of demand for staff resulted in moderate rises in permanent placements and temp billings and pay growth weakened as skills shortages eased.

Nationwide Building Society said in a statement an index gauging sentiment fell 4 to 81 on inflationary pressures, a weaker currency and declining share prices, to the lowest level on record since 2004. The Expectations index fell 4 to 79 on the worries related to future job market in the next six months.

The Present Situation Index (how consumers feel about the current economic and employment situation) fell five points to 83 (from 88 in December), reflecting consumers increased gloom about the current state of the economy. In spite of this, the Spending Index (consumers’ willingness to spend) remained stable in January. However, at 68, it’s still considerably lower than the same time last year (90 in January 2007).

Gainers and Losers

British Sky Broadcasting led advancers of the 102 FTSE 100 index shares with a rise of 7.05% followed by rises in Reckitt Benckise of 4.39%, in British Energy of 4.16%, in WM Morrison of 3.75%, and in Cadbury Schweppes of 3.72%.

British Sky Broadcasting rose the most in five years after forecasting that full-year operating profit will be at £740 million.

BHP Billiton Plc led decliners of the 102 FTSE 100 with a drop of 4.82%, in Cairn Energy of 2.68%, in Taylor Wimpey of 2.65%, in Vedanta Resources of 2.54%, in Legal & General Group Plc

BHP declined after recording the first profit decline in five years. The company reported today that first half profit fell 2.8% to $6 billion from $6.1 billion a year ago.

British Sky Broadcasting Earnings

BSkyB reported revenue rise in the first half of 11% to £2.5 billion and adjusted profit of £307 million. The basic loss per share increased to 6.4 pence including £282 million and adjusted earnings per share declined to 9.7 pence from 11.3 pence in fiscal 2007.

The media company added 167,000 in the quarter to 8.832 million and added 385,000 in the first half of fiscal 2008. Churn rate in the half was recorded at 10 and average revenue per customer rose 7% to 421 pounds for the year.

Sky+ added 434,000 subscribers with a reach of 3.1 million households and 260,000 customers added broadband internet subscriptions.

The company said that revenue increased by 11% to £2,458 million with operating profit of £295 million was stated after £103 million of investment in Sky Broadband, Sky Talk and Easynet Enterprise, as well as exceptional legal costs of £12 million. Excluding these items, operating profit was £410 million.

Sky+ households exceeded three million with a record 434,000 net additions in the quarter to reach 35% penetration of the base, up four percentage points on the previous quarter. Multiroom households grew by 120,000 in the quarter, now 17% of the base; and Sky HD also showed good growth, increasing by 18% to 422,000, 5% of the base.

[R]1:00PM New York – Rio Tinto rejects revised offer from BHP as inadequate.[/R]

Rio Tinto ((RTP)) board rejected a revised offer from BHP Billiton after saying that it significantly undervalues the underlying assets.

The revised offer from BHP Billiton values Rio Tinto at $147 billion and it offered to exchange 3.4 stocks of BHP for 1 stock of Rio Tinto. The offer, though revised 15% higher, failed to convince management and board to take action.

The BHP ((BHP)) takeover attempt of Rio Tinto was complicated after Chinalco and Alcoa together acquired 9% stake of the whole company and 12% in the London listed stock. Chinalco and Alcoa are significant customers of iron ore and other minerals mined by Rio. If BHP and Rio merge, customers like Alcoa and Chinalco may face higher prices and a significant dependency on one company for its raw materials.

BHP revised its offer today to meet takeover regulation in the UK.BHP may be forced to revise its offer again or carry out a hostile offer directly to its shareholders.

In New York trading Rio Tinto fell 2% or $9 to $411.76 and BHP fell 4% or $2.83 to close at $66.60.

[R]12:30PM New York – U.S. stocks rebound from the losses at the opening.[/R]

After early decline in the U.S. market averages, stocks rebounded on earnings from Disney, Time Warner, BHP Billiton, JDS Uniphase, and Toll Brothers.

BHP Billiton revised its offer for Rio Tinto to $147 billion from $127 billion. The revised offer, delivered on the last day to the UK regulatory requirements sparked another round of speculation of a counter offer from China controlled Aluminum Company of China, also known as Chinalco. Only few days ago Chinalco and Alcoa teamed to buy 9% stake in Rio Tinto and left the door open for a bid for Rio.

Rising Productivity

In the fourth quarter of 2007, productivity increased 0.6% in the business sector, with output increasing 0.2% and hours decreasing 0.5%.

In the nonfarm business sector, productivity rose 1.8% as output grew 0.4% and hours fell 1.5%. When the annual averages for 2007 were compared with annual averages for 2006, productivity rose 1.6% in the business and nonfarm business sectors--slightly more than the 1.0% gain in both sectors from 2005 to 2006.

Time Warner Earnings

Time Warner ((TWX)) reported fourth quarter earnings and provided outlook for 2008. Time Warner stock ((TWX)) rose 4.6% or 70 cents to $16.10.

Fourth-quarter revenues were up 2% from a year ago to $12.6 billion on increases at the cable and filmed entertainment segments. Adjusted operating income before depreciation and amortization climbed 16% to $3.5 billion, benefiting from increases at the cable, filmed Entertainment, AOL and Publishing segments. Operating Income grew 12% to $2.3 billion.

Diluted earnings per share fell to $0.28 from $0.43 a year ago. The current and prior year amounts included certain items affecting comparability resulting in a decrease of $0.01 per diluted common share and to increase the prior year results by $0.21 per diluted common share.

For the year 2007, revenue rose 6% to $46.5 billion from a year ago and operating earnings increased 23% to $8.9 billion and diluted earnings per share from continuing operations of $1.08 per share compared to $1.20 in 2006. The net impact of non-recurring items was to increase the current and prior year results by $0.12 and $0.40 per diluted common share, respectively.

Net Debt totaled $35.6 billion, up $2.2 billion from $33.4 billion at the end of 2006, due primarily to the Company’s stock repurchase programs.

AOL unit, online service and content provider, revenue declined in the fourth quarter by 30% to $1.251 billion and for the year fell 20% to $5.2 billion.

During the fourth quarter, AOL had 109 million average monthly domestic unique visitors and 49 billion domestic page views, according to comScore Media Metrix, which translates into 150 average monthly domestic page views per unique visitor.

As of December 31, 2007, the AOL service had 9.3 million U.S. access subscribers, a decline of 740,000 from the prior quarter and 3.8 million from the year-ago quarter, reflecting subscriber losses due to AOL’s strategy to prioritize its advertising business.

Time Warner expects its 2008 full-year growth rate in adjusted operating income before depreciation and amortization to be in the range of 7% to 9%, from $12.9 billion in 2007.

In addition, annual free cash flow will be at or above $3.6 billion and 2008 full-year earnings per diluted share from continuing operations to be in the range of $1.07 to $1.11.


Disney Earnings

Disney ((DIS)) rose 5.7% or $1.71 to $31.76 after reporting earnings that surprised investors.

The Walt Disney Company reported first quarter revenue rise of 9% to $10.45 billion from a year ago. Net income from continuing operations in the quarter ended Dec 29, 2007 fell 25% from a year ago to $1.25 billion from $1.75 billion a year ago and diluted earnings per share declined to 63 cents per share from 79 cents a year ago.

Earnings in the prior-year quarter, which included gains on sales of our interests in E! Entertainment and Us Weekly, income from the discontinued operations of the ABC Radio business, and an equity-based compensation plan modification charge, were $0.79. Excluding these items, EPS increased 29% to $0.63 from $0.49 in the prior-year quarter.

Media Networks revenues for the quarter increased 10% to $4.2 billion and segment operating income increased 28% to $908 million. Operating income at Cable Networks increased $125 million to $586 million for the quarter driven by increases at ABC Family Channel and the domestic Disney Channels. Growth at ABC Family Channel was due to the absence of programming costs for Major League Baseball and higher affiliate and advertising revenue, both of which were driven by higher rates.

Parks and Resorts revenues for the quarter increased 11% to $2.8 billion and segment operating income increased 25% to $505 million. Operating income growth at Disneyland Resort Paris was primarily due to increased attendance, guest spending, hotel occupancy and real estate sales. Increased guest spending was driven by higher average daily room rates and increased food and beverage spending.

Studio Entertainment segment operating income for the quarter decreased 15% to $514 million while revenues were essentially flat at $2.6 billion.


Asian Markets Update

Asian markets closed sharply lower after worries related to the U.S. service sector slowdown dragged the indexes in the region.

In Tokyo Nikkei 225 Index closed lower 646.26 or 4.70% to 13,099.24, in Hong Kong Hang Seng index decreased 1339.24 or 5.40% closed to 23,469.46, in Australia ASX 200 index lower 183.50 or 3.17% to close 5,609.40.

Thailand SET index closed lower 13.05 or 1.62% to 794.63, and Indonesia JSE Index edged decreased 65.16 or 2.41% to 2,639.09. Sensex index in India decreased 523.70 or 2.81% to 18,139.49. Market of South Korea was closed today.


[R]10:00AM New York, 7:30PM Mumbai – Sensex trading remains in grip of global markets events and fell in line with others markets around the world.[/R]

Market Sentiment

Indian markets on Wednesday continued to reel under heavy selling pressure in the afternoon session with the benchmark index shedding 2.8% or 523.67 at 18,139.49.

In the broader markets, Nifty shed 2.9% or 161.35 at 5,322.55.

Of the BSE shares, 1,298 advanced, 1,484 stocks declined, and 31 stocks remained unchanged. Among the Sensex index shares, 28 slumped while 2 advanced.

IT share declined for a second day in a row due to a gloomy economic outlook in the United States. Satyam Computer, Infosys Technologies and Wipro were the leading the decliners in the sector.

Key decliners in the Sensex index included Bharti Airtel, TCS, Hindalco, Tata Motors, Maruti Suzuki India, ONGC, DLF Limited, Ranbaxy, NTPC, Tata Steel, Reliance Industries and ICICI.

Daily turnover on the BSE stood at 6,289 crore rupees while daily revenue on the National Stock Exchange was at 13,927 crore rupees.

Reliance Natural Resources was the most active stock on the BSE. It recorded a turnover of 469 crore rupees. Nagarjuna Fertiliser and Chemicals, IFCI and Tata Teleservices were also on the active list.

Economic News

Indian economy will attract more global investments benefiting from the US slowdown but the country should not get psyched by the bubble burst there, Commerce and Industry Minister Kamal Nath said on Wednesday.

Earlier, the US was the most attractive investment destination for funds from the Middle East and Russia and ""India is becoming an important parking lot for investments,"" Nath added.

Gainers and Losers

Satyam Computer Services shed 6.7% to 408.65 rupees, Wipro lost 6.5% to 425 rupees, Infosys slid 6.3% to 1,510.60 while Tata Consultancy Services slumped 5.2% to 900.55 rupees.

Metal stocks declined. Sterlite Industries lost 5.8% to 788.05 rupees, National Aluminum Company shed 5.8% to 390.05 rupees, Hindalco Industries was down 4.9% to 173.05 rupees and Steel Authority of India closed weak at 4.9% to 221.15 rupees.

Maruti Suzuki India dropped 4.8% to 30.25, Tata Motors fell 2.6% to 736.25 rupees, Bajaj Auto shed 2.7% to 2,339.45 rupees and Mahindra & Mahindra lost 2.4% to 664.05 rupees.

ICICI Bank fell 3.1% to 1,152.85 rupees. Larsen & Toubro fell 1.9% to 3,780.60 rupees.

Reliance Update

Reliance Industries fell 2.4% at 2,552.05 rupees on the reports that two oil wells in D6 block in the Krishna Godavari basin have run into technical difficulties. The losses from the technical problems are estimated at $175 million but will not delay production of natural gas from the D6 block.

Reliance Energy rose to 2,056.35. Reliance Communications rose 0.7% to 681.6 rupees. Reliance Communications is reportedly set to test-launch its Direct-to-Home services called Big TV this week, before a full commercial launch in March this year.

According to reports, the company is investing $250 million in the first phase for the launch and has placed order for over 2 million set-top boxes.

International Markets

U.S. stocks closed sharply lower on Tuesday with Dow Jones Industrial Average, Nasdaq index, and S&P 500 falling between 2.5% and 3%. Market averages fell after January service sector index showed a decline in service industry, contrary to what most economists had hoped.

In Tokyo Nikkei 225 Index closed lower 646.26 or 4.70% to 13,099.24, in Hong Kong Hang Seng index decreased 1339.24 or 5.40% closed to 23,469.46, in Australia ASX 200 index lower 183.50 or 3.17% to close 5,609.40.

Thailand SET index closed lower 13.05 or 1.62% to 794.63, and Indonesia JSE Index edged decreased 65.16 or 2.41% to 2,639.09. Sensex index in India decreased 523.70 or 2.81% to 18,139.49. Market of South Korea was closed today.

In London FTSE 100 Index closed higher 7.40 or 0.13% to 5,875.40, in Paris CAC 40 Index increased 39.57 or 0.83% to close at 4,816.43 and in Frankfurt DAX index higher 82.26 or 1.22% to close at 6,847.51. In Zurich trading SMI increased 48.04 or 0.64% to close at 7,565.45.


[R]6:00AM New York, 6:00PM Hong Kong - IMF revises Hong Kong economic growth estimate to 4.6%. Insurers pay Rmb680 million in losses related to snow storms.[/R]

Market Sentiment

Stocks in Hong Kong were hit by massive sell-off across the board before the market closed after the morning session for the Lunar New Year holiday. Worries over the U.S. economy that triggered losses in other Asian markets also negatively affected trading.

In Hong Kong trading Hang Seng Index fell 5.4% or 1,339.24 at 23,469.46, down 0.8% for the week, and the Hang Seng China Enterprises Index, which tracks ``H shares'''' of Chinese companies, slid 6.9 % to 13,067.11.

Daily turnover on main-board was HK$70.66 billion from HK$46.44 billion in yesterday’s morning session.

Economic Forecast

The Standard news reported today the IMF revised Hong Kong’s GDP growth estimate to 4.6% this year from rate of 6% in 2007 on the projection of falling demand from the United States and in Europe.

IMF observed that “the biggest risk to this outlook is a more-than-expected deterioration on external demand, especially in the U.S. and in Europe, and potentially further financial turbulence, both internally as well as domestically”.

According to the Fund, inflation will rise 3.7% this year from 2.2% in 2007.

Snow Storm Losses

Separately, the online edition added that the China Insurance Regulatory Commission reported that mainland insurance companies have paid an estimated Rmb680 million in compensation caused by the recent snowstorms.

In addition, Xinhua News Agency also reported today China has intensified relief efforts to the country’s southern, central and eastern regions in order ease price pressures during the forthcoming Lunar New Year holidays.

Economic losses from the snowstorms are currently estimated at Rmb80 billion.

Merger News Update

Commodities stock Chalco plunged 7% after BHP Billiton upped its bid for Rio Tinto International to $147.4 billion. Chinalco, the parent of Chalco, last week allied with Alcoa to purchase a 9% stake in Rio Tinto.

Gainers and Losers


Financial stocks fell in today’s trading on lingering sub-prime market turbulence. The International Commercial Bank of China declined 6.35% to HK$4.97, China Construction Bank fell 6.74% to HK$5.67, and HSBC shed 4.12% to HK$113.90.

Export-related companies also fell after a report in the U.S. showed that business activity in the non-manufacturing sector fell in January, sparking the fears of recession in the U.S.

Li & Fung, the largest apparel maker, declined 7.22% to HK$27.00 and retailer Esprit, which is reliant on the European market, fell 6.91%.



[R]5:00AM New York, 7:00PM Tokyo – Stocks in Japan fell after the U.S. recession fears intensified on a latest read on the service sector showed a decline in activities.[/R]

Stock indexes in Japan declined sharply after the sell-off in the U.S. markets and a weakness in European trading.

In Tokyo trading Nikkei 225 fell 4.7% or 646.26 to 13,099.24, and the broader Topix Index slipped 4.2% or 57.07 to 1,298.41.

Market Sentiment

In the first section of the Tokyo Stock Exchange 11.2 billion shares worth 1.2 trillion yen were traded and in the second section 319 million shares valued at 3.8 billion yen changed hands.

Of the Nikkei 225 stocks 7 rose, 217 declined, and 1 was unchanged. Clarion Co. Limited led gainers with a rise of 6.19%.

The U.S. Institute for Supply Management reported yesterday in its January 2008 Non-Manufacturing Report on Business that business activity in the non-manufacturing sector contracted in January for the first time in 58 months.

According to the index, the New Orders Index at 43.5% fell to the lowest since October 2001 and Employment Index declined the most since February 2002 at 43.9%.

The Employment Index fell to 70.7% indicating a decline in price increases in January.

Of the companies surveyed, only three reported growth while 14 recorded contraction.

“Members'' comments in January indicate that weakness in the economy coupled with increased costs have negatively affected their business. Members have also indicated that they are experiencing inflationary pressures,” as highlighted in the report.

Subprime Losses and Bond Insurers

Fitch Ratings announced on its web site that it had placed MBIA Inc. “AAA” rating on negative watch. The U.S. bond insurer provides insurance to municipal, state, and other regional government debt offering s for a fee. In the last five years the company had branched out to mortgage securities. However, a large number of mortgage bonds have lost value prompting heavy expenses at the insurer. The bond insurer has raised nearly $1 billion in new capital to bolster its balance sheet but investors worry that future subprime losses may leave the insurer with less capital and then adequate to pay for the insurance coverage.



Merger News Update

The Yomiuri online edition reported today that plans between Japan Tobacco and Nissin Foods Limited to merge their frozen foods units had collapsed amid accusations that Japan Tobacco had sold poisoned China made dumplings.

Under the deal, Japan Tobacco wanted to sell 49% equity in its frozen food unit Katokichi Co.

The yen declined from 106.38 to 106.43 against the dollar.

Gainers and Losers

Clarion Co. Limited led gains of the Nikkei 225 index shares with a rise of 6.19% followed by gains in Nikon Corp. of 3.08%, in Asahi Brewers of 2.50%, in NSK Limited of 2.09%, and Mitsubishi Heavy Industries of 1.60%.

Tosoh Corp. led decliners with a fall of 12.92% followed by losses in Mitsui & Shipbuilding of 12.30%, in Toho Zinc Limited of 11.15%, in Dowa Holdings Co. of 10.68%, and in Unitika Limited of 10.62%.

Earnings News

Nikon Corp. rose on the back of strong earnings results. The company reported net income grew 13% to 26 billion yen. Sales also jumped 14% from the previous quarter to 266.4 billion yen on strong sales of D3 and D300.

Mitsubishi Heavy Industries also gained as net income in the nine months jumped 41% to 54.2 billion yen from 38.5 billion yen on lucrative contracts to build ships.

The company also raised its full-year net income forecast to 60 billion yen from 54 billion yen. Operating profit is also forecasted to rise to 130 billion yen from115 billion yen.

Rohm Co, which is a parts supplier to Nintendo, cut its full-year annual profit target by 25%. Similarly, Orix Corp lowered its annual profit estimate by 16%.

Oil and Commodities Related

Shipping lines and commodity stocks also fell on speculation that the U.S. is in recession, a development that might lead to falling demand. Sumitomo Metal Mining shed 7.23%, Nippon Mining House declined 8.87%.

Energy stocks fell after crude oil prices for March delivery fell 1.9% to $88.41 per barrel yesterday.


Asian Markets Update

In Tokyo Nikkei 225 Index closed lower 646.26 or 4.70% to 13,099.24, in Hong Kong Hang Seng index decreased 1339.24 or 5.40% closed to 23,469.46, in Australia ASX 200 index lower 183.50 or 3.17% to close 5,609.40.

Thailand SET index closed lower 13.05 or 1.62% to 794.63, and Indonesia JSE Index edged decreased 65.16 or 2.41% to 2,639.09. Sensex index in India decreased 523.70 or 2.81% to 18,139.49. Market of South Korea was closed today.


[R]3:00AM New York, 7:00PM Sydney- ASX 200 index fell 3.2% after loses in resource and financial stocks.[/R]

Market Sentiment

ASX 200 index lost 3.2% or 183.5 to close at 5,609.40.

The Preliminary market turnover was 407.7 million shares worth $861.4 million, with 108 stocks closing up, 774 stocks down, and 224 unchanged.

Market Driver

BHP Billiton revised its offer for Rio by 13% to 3.4 stocks of BHP to one Rio Tinto stock. BHP disclosed the new offer in a statement to the Australian stock exchange today. BHP had been given until today by the UK Takeover Panel to formalize its offer or walk away for six months.

If successful, the takeover would result in BHP shareholders owning 56% of the merged entity and Rio Tinto investors will control 44%.

BHP Billiton CEO Marius Kloppers said that the offer, which sought to create a ""diversified resources industry super-major"" represented a 45% premium on the fair trading value of Rio Tinto stock, which shot up after BHP Billiton first revealed it had proposed a takeover late last year.

Rio Tinto acknowledged the new offer in a statement and urged shareholders to wait for the board to review the revised offer. The offer is dependent on acceptances from shareholders owning more than 50% of the publicly held shares in each of Rio Tinto Limited and Rio Tinto plc.

Media reports in Britain today said Aluminum Corp of China, Chinalco and Alcoa, which acquired 9% of Rio, when counting the share traded in Australia, are expected to make a counter offer. Earlier Chinalco and Alcoa paid $14.2 billion for a stake in Rio Tinto.

However other media reports from Britain said sources familiar with the situation had said the Chinese were in no rush to make a next move. Meanwhile BHP''s first-half profit fell 2.4% because of higher production costs. Net income was $6 billion in the six months ended December 31, from $6.2 billion a year earlier.

BHP said costs increased 1.9% in the half and forecast the global economy will slow. Kloppers projected $3.7 billion in cost savings and revenue gains in the event of merger between the two companies.

The underlying earnings before interest and tax declined $506 million due to a weaker dollar. Earnings for the aluminum, stainless steel materials and coking coal units fell.

BHP fell 7.4% while Rio shed 1%.

Gainers and losers

Of the ASX 200 index shares, Telstra Corp led the gainers with a rise of 5% followed by increases in Telstra Corp of 3%, in Compass Resource of 1.8%, AWB Limited in of 1.4%, and in Babcock and Brown of 1.1%.

Of the ASX 200 index stocks, Perilya Limited led the decliners with a fall of 11.5% followed by losses in Centro Properties of 10.2%, in Centro Retail Group of 9.4%, in FKP Property Group of 9.2% and in IOOF Holdings LT of 9.1%.

Moss to leave Macquarie

Investment bank, Macquarie Group''s managing director and chief executive officer Allan Moss has announced that he is stepping down from the position in late May after more than 15 years at the helm.
Moss will be replaced by the current head of Macquarie Capital, Nicholas Moore. Moore, 49, who runs the division that generates more than 50% of profit, assumes the top job on May 24. Macquarie stock fell 9%.

Primary on Symbion takeover

Primary Health Care Ltd has indicated that it would declare its takeover bid for Symbion Health Ltd unconditional if it achieves an interest in Symbion of 50.1% by the end of February 12. Primary is offering $4.10 per share for Symbion, valuing the target at $2.65 billion and would not raise it in the absence of a competing bid.

Primary said that as of February 5 it had interests in Symbion - including acceptances under the offer and acceptance instructions under an institutional acceptance facility - of 45.59% of Symbion shares.

Primary is battling private hospitals operator Healthscope Ltd for control of Symbion''s pathology, diagnostic imaging and medical centres, referred to as the diagnostics businesses. Healthscope has 11.91% stake in Symbion.

Healthscope has twice attempted to secure Symbion''s diagnostics assets. One bid was blocked by Primary and the other by an adverse tax ruling.

Australian Agricultural Company full-year profit down 64%

Cattle rancher, Australian Agricultural Company has announced that its full-year profit fell 64% on gains in the local currency and higher feed prices.

The country''s biggest cattle rancher said net income fell to $3.6 million, in the 12 months ended December 31, from $10.1 million a year earlier.

Earnings per share dropped to 1.4 Australian cents, from 4 cents a year earlier. Full-year sales rose 27% to $249 million. Australian Agricultural stock fell 2.3%.

Stockland''s first-half profit up 11%

Australia''s largest housing developer Stockland reported first-half profit increase of 11% after the company broke its dependence on the housing market by venturing into retirement villages and shopping malls. The company earned $324.6 million in operating profit excluding gains from asset valuations, from $293.1 million a year ago.

Managing Director Matthew Quinn has spent more than $1 billion buying shopping centers, retirement villages and offices, and making his first European purchase. Australian sales of new homes slowed as the central bank raised interest rates seven times since 2004. Stockland fell 3%.