UBS Loss Depresses Stocks

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

UBS,Swiss Banking group, fell 8% after reporting a loss of 12.5 billion francs. Group Danone fell 3.5% after reporting earnings for 2007 of 4.2 billion euros including the one-time gain of 3.1 billion euros for the sale of biscuits and cereals unit. Net sales in 2007 increased to 12.7 billion euro, an increase of 10% from the continuing business or 5.9% including the acqusition of Royal Numico sales.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European stocks struggled after the comments from the Fed Chairman and 12.5 billion francs loss at UBS. Banks across the region declined.[/R]

European Markets

In London FTSE 100 Index closed lower 5.40 or 0.09% to 5,874.70, in Paris CAC 40 Index increased 3.25 or 0.07% to close at 4,858.65 and in Frankfurt DAX index lower 11.39 or 0.16% to close at 6,962.28. In Zurich trading SMI decreased 34.46 or 0.46% to close at 7,501.99.


North American Markets indexes

Dow Jones Industrial Average lost 175.26 or 1.40% to a close of 12,376.98, S&P 500 closed down 18.35 or 1.34% to 1,348.86, and Nasdaq Composite Index traded down 41.39 or 1.74% to a close of 2,332.54. In Toronto TSX Composite closed down 167.84 or 0.57% to close at 13,208.03.

Of the 30 stocks in Dow Jones Industrial Average, 1 closed higher, 29 closed lower, and none were unchanged.

Exxon Mobil was the lone gainers in the Dow Jones index with a rise of 0.07%. Intel led the decliners in the index with a fall of 3.5% followed by losses in JP Morgan of 3.4%, in Home Depot of 2.9%, in American Express of 2.5%, and in General Motors of 2.4%.

Of the stocks in S&P 500, 56 closed higher, 444 fell, and none were unchanged. Of the index stocks, 63 rose more than 3% and equal number of 9 stocks fell more than 3%.

Liz Claiborne led the decliners in the index with a fall of 18% followed by declines in Nvidia of 16%, in Jones Apparel of 9.9% and in Office Max of 8%. Apollo Group, CIT, and Network Appliance lost more than 6%. Ambac Financial led the gainers in the index with a rise of 12% followed by gains in MBIA of 8.4%, in Comcast Corp 8%, and in Goodyear of 7.4%.

South American Markets Indexes

In Latin Markets Colombia led the gainers in the region with a rise of 1.49% followed by increases in Venezuela of 1.24%. Brazil led the decliners in the index with a fall of 1.23% followed by losses in Chile of 0.77%, and in Mexico of 0.57%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 558.15 or 4.27% to 13,626.45, in Hong Kong Hang Seng index increased 852.13 or 3.68% closed to 24,021.68. Australia ASX 200 index increased 142.70 or 2.57% to close 5,684.80.

In South Korea Kospi Index increased 65.67 or 4.02% to close at 1,697.45, in Thailand SET index closed higher 2.70 or 0.33% to 832.11 and Indonesia JSE Index edged increased 64.86 or 2.48% to 2,675.65. Sensex index in India increased 817.50 or 4.82% to 17,766.63.

Bond Yields increased on 10-year U.S. bonds to 3.80% and on 30-year bonds rose to 4.62%.

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

Crude oil added $1.94 to close at $95.21 per barrel for a front month contract, natural gas increased 36 cents to $8.75 per mBtu, and gasoline futures increased 7.720 cents to close at 246.70 cents per gallon.

Gold increased $0.60 in New York trading to close at $910.80 per ounce, silver closed down 6 cents to $17.25 per ounce, and copper for front month delivery decreased 5.30 cents to 345.00 per pound and in London copper futures decreased $111.00 to $7,812.00.

Wheat futures rose 33.50 cents in Chicago trading and closed at $10.41 per bushel. Sugar increased 0.37 cents to 13.63 cents per pound. Soybean future closed up 38.50 cents to $13.85 per bushel.

Dollar edged lower but traded near record lows against euro to $1.46380 and edged lower against yen to 107.86.


[R]12:00PM New York, 6:00PM London- Bernanke comments reverses gains in London

Stocks in London reversed earlier gains to close down after comments by U.S. Federal Reserve Chairman Ben Bernanke to the U.S. Senate that banks were still vulnerable to subprime related losses sparked a sell-off in financial and home builders’ stocks. Bernanke highlighted risks to the economic downturn and said that economic growth is likely to remain sluggish in the near term.

Market Sentiment

In London trading FTSE 100 stocks fell fractionally by 0.01% or 0.8 to 5,879.30.

Of the FTSE 100 stocks 44 gained, 54 declined and 4 were unchanged. Diageo Plc led advancers after reporting that first half profit increased 8.9% to £975 million.

Bernanke Sees More Downside Risk with the Economy

The U.S. stocks declined sharply after the Fed Chairman Bernanke highlighted the risks to the economic downturn linked to the ongoing correction in the housing market and dramatic decline in the health of the U.S. banks.

The Federal Reserve Chairman Ben Bernanke sounded a cautionary note in his testimony to the Senate. Bernanke highlighted the recent strains in the banking sector and turmoil in the mortgage securities markets also noted the recent weakness in dollar, rising food and energy price inflation, and ongoing correction in the housing market.

He noted, “In part as the result of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased. To date, the largest economic effects of the financial turmoil appear to have been on the housing market.

The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes. Further cuts in homebuilding and in related activities are likely.”

He also alluded to the lack of flexibility the Fed enjoys in tacking the issue in the short term and noted that, “Monetary policy works with a lag. Therefore, our policy stance must be determined in light of the medium-term forecast for real activity and inflation, as well as the risks to that forecast.”

He estimated that the short term economic growth will be impacted by the current malaise in the securitization markets and a weakness in the construction industry.

He said in his testimony, “At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt.”

The Chairman sounded optimistic tone on the inflation and hoped that inflation will remain under check. He estimated that, “At the same time, overall consumer price inflation should moderate from its recent rates, and the public''s longer-term inflation expectations should remain reasonably well anchored.”

Financial Services Rose in 2007

Bloomberg news reported today that according to recruitment company Morgan McKinley bonuses for London’s financial service workers increased for 80% of the institutions.

The survey reportedly involved 220 traders, bankers and support staff.

According to the company new job vacancies fell 20% to 8,127 in January from a year earlier. The study also notes that the number of people seeking to change jobs after the bonus season rose 11% from a year earlier in January.

In addition, the average salary, which excludes the bonus, for London''s 1.3 million financial-services employees, is estimated to have increased 5% from a year earlier to £53,246.

Gainers and Losers

Diageo led advancers in the FTSE 100 stocks with a rise of 4.55% followed by gains in Reckitt Benckise of 2.86%, in Sainsbury Plc of 2.63%, in Vedanta Resources of 2.56%, in BT Group of 2.43%.

Diageo rose after the company reported first half profit rose 8.9% after the liquor maker reported an 8.9 % gain in first-half profit to £975 million on higher sales of Smirnoff vodka and Johnnie Walker whiskey in Asia and North America.

Anglo America climbed 2.28% and Xstrata jumped 1.90% as a result.

HBOS Plc led decliners in the FTSE 100 stocks with a drop of 5.11% followed by losses in Home Retail Group of 3.9%, in British Land Co. of 3.87%, in Schroders Plc of 3.77% and Schroders of 3.31%.

Other financial stocks also declined on Bernanke’s comments and after UBS added $26.2 billion in exposure to the U.S. mortgage backed securities. Alliance & Leicester fell 2.77%, Barclays declined 2.37%, and Royal Bank of Scotland fell 2.23%.

Homebuilders also fell as well. Wolseley shed 2.51% and Hammerson edged down 3.02%.

International Markets

In Tokyo Nikkei 225 Index closed higher 558.15 or 4.27% to 13,626.45, in Hong Kong Hang Seng index increased 852.13 or 3.68% closed to 24,021.68. Australia ASX 200 index increased 142.70 or 2.57% to close 5,684.80.

In South Korea Kospi Index increased 65.67 or 4.02% to close at 1,697.45, in Thailand SET index closed higher 2.70 or 0.33% to 832.11 and Indonesia JSE Index edged increased 64.86 or 2.48% to 2,675.65. Sensex index in India increased 817.50 or 4.82% to 17,766.63.

In London FTSE 100 Index closed lower 5.40 or 0.09% to 5,874.70, in Paris CAC 40 Index increased 3.25 or 0.07% to close at 4,858.65 and in Frankfurt DAX index lower 11.39 or 0.16% to close at 6,962.28. In Zurich trading SMI decreased 34.46 or 0.46% to close at 7,501.99.


[R]12:30PM New York – U.S. stocks declined after comments from the Fed Chairman Bernanke.[/R]

The U.S. stocks declined sharply after the Fed Chairman Bernanke highlighted the risks to the economic downturn linked to the ongoing correction in the housing market and dramatic decline in the health of the U.S. banks.

The Federal Reserve Chairman Ben Bernanke sounded a cautionary note in his testimony to the Senate. Bernanke highlighted the recent strains in the banking sector and turmoil in the mortgage securities markets also noted the recent weakness in dollar, rising food and energy price inflation, and ongoing correction in the housing market.

He noted, “In part as the result of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased. To date, the largest economic effects of the financial turmoil appear to have been on the housing market.

The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes. Further cuts in homebuilding and in related activities are likely.”

He also alluded to the lack of flexibility the Fed enjoys in tacking the issue in the short term and noted that, “Monetary policy works with a lag. Therefore, our policy stance must be determined in light of the medium-term forecast for real activity and inflation, as well as the risks to that forecast.”

He estimated that the short term economic growth will be impacted by the current malaise in the securitization markets and a weakness in the construction industry.

He said in his testimony, “At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt.”

The Chairman sounded optimistic tone on the inflation and hoped that inflation will remain under check. He estimated that, “At the same time, overall consumer price inflation should moderate from its recent rates, and the public''s longer-term inflation expectations should remain reasonably well anchored.”

Unemployment claims declines

In the week ending Feb. 9, the advance figure for seasonally adjusted initial claims was 348,000, a decrease of 9,000 from the previous week''s revised figure of 357,000.

The four-week moving average was 347,250, an increase of 12,000 from the previous week''s revised average of 335,250. Alaska registered the highest insured unemployment rate with 4.9% followed by 4.5% in Michigan and 4% in Rhode Island.

Metro Home Prices

In the fourth quarter, 73 out of 150 metropolitan statistical areas show increases in median existing single-family home prices from a year earlier, including 11 areas with double-digit annual gains and another 12 metros showing increases of 6 percent or more; 77 had price declines including 16 with double-digit drops.

Lawrence Yun, NAR chief economist, said disruptions in the mortgage market have played a role. “The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges,” he said.

Yun added, “For buyers who need loans of more than $417,000, mortgage interest rates have been running more than a percentage point higher, and that has been having an obvious impact. Higher ratios of sales for more moderately priced homes are naturally dampening the national median price as well as the data for some of the more expensive markets.”

International trade and services deficit declines in 2007

The Department of Commerce reported total December exports of $144.3 billion and imports of $203.1 billion resulted in a goods and services deficit of $58.8 billion, down from $63.1 billion in November, revised.

December exports were $2.2 billion more than November exports of $142.2 billion. December imports were $2.2 billion less than November imports of $205.3 billion.

For 2007, exports of $1,621.8 billion and imports of $2,333.4 billion resulted in a goods and services deficit of $711.6 billion, $46.9 billion less than the 2006 deficit of $758.5 billion.

For goods, exports were $1,149.3 billion and imports were $1,964.9 billion, resulting in a goods deficit of $815.6 billion, $22.7 billion less than the 2006 deficit of $838.3 billion.

For services, exports were $472.5 billion and imports were $368.5 billion, resulting in a services surplus of $104.0 billion, $24.2 billion more than the 2006 surplus of $79.7 billion.

For the year 2007, goods and services deficit or total traded deficit declined to 5.1% of GDP from 5.7% in 2006.

Bear Stearns and Citic to swap at lower price


Bear Stearns and CITIC in China have agreed to revalue their respective investments in each other at a lower price. The deal struck three months ago was revised to reflect the current market conditions.

While the new agreement shows that the two companies will keep their investment but will now own higher stake in each other.

[R]10:00AM New York, 7:30PM Mumbai - Sensex rallied for the second day in a row on rising global markets. Oil refineries and distributors rallied after petrol and diesel price were increased.[/R]

Market Sentiment

Mumbai stocks surged on Thursday with the benchmark index Sensex gaining 4.8% 817.49 and CNX Nifty rose 5.3% or 5,202.00 levels.

Sharp in rise in Europe and the U.S. listed Asian markets. The rally in global markets was triggered by an unexpected rise in US retail sales in January 2008.

Buying was evident in capital goods and power stocks. Oil and gas stocks perked up on reports the Indian government has raised retail fuel prices to ease losses at state-run oil marketing firms.

Of the Sensex shares, 29 stocks rose while 1 fell. Of the stocks traded on the BSE, 2,057 stocks advanced, 697 declined, while 41 stocks remained unchanged.

BHEL closed at 2,232 rupees was the biggest gainer among the BSE-30 shares. Reliance Energy, Reliance Communication, Hindalco and ONGC were the other top movers in the Sensex advancing over 8.7% each.

Among the NSE-50 shares, Reliance Petroleum, BPCL, Unitech and Suzlon Energy were the top gainers.

Gainers and Decliners

The BSE realty index surged 7.6% or 714 and Ansal API, Phoenix Mills, Unitech and Indiabulls Real Estate were the top gainers in this pack.

Daily turnover on the BSE stood at 5,714 crore rupees while daily revenue on the National Stock Market was at 13,545.99 crore rupees.

Jaiprakash Associates was the most active stock as it recorded daily turnover of 502.03 crore rupees on BSE. Reliance Natural Resources, Reliance Power, Reliance Capital, and Reliance Petroleum were also among most active stocks.

Steel Authority of India surged 7.6% to 213.75 rupees. Power Grid Corporation of India moved up 8.7% to 103 rupees.

NTPC jumped 6.8% to 200.75 rupees while Tata Power climbed 5.1% to 1,275.8 rupees.
Oil refinery and marketing stocks surged on reports the government has raised prices of petrol and diesel by 2 rupees per litre and 1 rupee per litre respectively effective today. Indian Oil Corporation jumped 13.8% to 536.75 rupees, BPCL advanced 10.8% to 465 rupees.

ICICI Bank added 5.7% to 1,162.35 rupees, HDFC Bank gained 4.9% to 1,539.10 rupees and State Bank of India rose 4.2% to 2,205.15 rupees.

Wipro climbed 1.4% to 415.75 rupees, Satyam Computer gained 1.3% to 438.4 rupees and TCS rose 0.6% to 874.15 rupees. However, Infosys Technologies lost 0.1% to 1547.3 rupees.

Larsen & Toubro climbed 7% to 3,507.15 rupees and Suzlon Energy surged 7.8% to 338.15 rupees.

Reliance Update

Reliance Industries rose 5.4% at 2,514.7 rupees. Reliance Energy soared 9.6% to 1,708.15 rupees. Reliance Petroleum gained 13.6% to 164.55 rupees.

Reliance Power rose 5.3% to 370.05 rupees on volume of 82.93 lakh shares on BSE. On Monday, the stock had debuted at 547.8 rupees, a premium of 21.7% over the IPO price of 450 rupees.

Contracts

Punj Lloyd gained 10.5% to 366.5 rupees. Sembawang, a unit of Punj Lloyd, the engineering and construction firm has bagged S$400 million contract to build part of the Marina Bay Sands integrated resort in Singapore.

Bharat Heavy Electricals surged 12.6% to 2,232 rupees after it won a 200 crore rupee contract to supply oil field equipment to Oil & Natural Gas Corporation.

[R]6:00AM New York, 6:00PM Hong Kong - Hong Kong’s Taxation Institute forecasts fiscal surplus of HK$100 billion. CITIC and Bear Stearns will reduce the stock price of investment in each other and raise stakes in each other.[/R]

Market Sentiment

In Hong Kong trading the Hang Seng Index rose 3.7% or 852.13 at 24,021.68, and the China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 4.7 % or 601.61 to 13,550.99.

Stocks gained after Japan’s fourth quarter GDP growth beat analyst estimates and on an unexpected rise in the U.S. retail sales in January.

Daily turnover on main-board was HK$94.3 billion compared to HK$82.5 billion on Wednesday.

Fiscal Surplus Projected to Rise

The Standard news online reported today that the Taxation Institute of Hong Kong said it forecasts fiscal surplus for the current financial year to rise to a record HK$100 billion from the current HK$86.8 billion.

The institute also urged the government to provide tax relief, retain stamp duty and broaden the tax base after """"the biggest bonanza year"""" since 1999.

The institute proposed a one year waiver of taxes for both residential and non-residential premises for the fiscal year beginning in April, subject to a maximum of HK$5,000 per quarter per unit.

Other proposals that were made by the institute also include broadening the margin tax band width to HK$40,000 from HK$35,000. The institute projected that stamp duty contribution may be as high as HK$40 billion

Bear Sterns and CITIC to revise deal

The China’s People Daily reported today that Bear Stearns and CITIC Securities will review a share swap deal and increase the stake in each other by lowering convertible prices of each share without changing the fixed investment scale.

After the price cut CITIC’s stake in Bear Stearns will increase from 6% to 9.9%, while the U.S. company’s 1 billion debt will translate into a 2.5% equity in CITIC, which will eventually rise to 7.5%.

The deal is still subject to regulatory approval.

Gainers and Losers

Shipping lines advanced after the Baltic Dry Index, which is used to gauge freight charges, gained. Reuters news also reported that negotiations for this year’s iron ore supply were at an advanced stage.

COSCO increased 10.1% to HK$23, Pacific Basin Shipping Limited gained 5.5 % to HK$12.68, and China Shipping Development Co Limited spiked 10% to HK$23.15

Commodities stock Chalco edged up 9% to HK$13.36 on the speculation that its parent company China Aluminum Company and the U.S. ally Alcoa plan to raise their stake in Rio Tinto to 20% from 12%.

Angang Steel spiked 10.8% to HK$16.56 on speculation it will benefit from the rebuilding effort in China after snowstorms caused economic damage worth $15 billion.

Also Alibaba.com rose 4.7% to HK$19.96 after Baidu.com said fourth quarter profit gained 79% on the year to Rmb219.8 million.

Company News

Baidu.com Inc’s fourth quarter profit increased 79% from a year ago to Rmb219.8 million. Online marketing revenues increased by 111.2% from a year earlier to Rmb569.6 million.

Full-year net profit jumped 108% to Rmb629 million and revenues increased by 110% to Rmb1.74 billion.


[R]5:00AM New York, 7:00PM Tokyo - Japan’s fourth quarter economic growth increases to 0.9% from 0.8% in the third quarter.[/R]

Stocks in Japan rebounded after the economic growth in the fourth quarter exceeded expectations and better than expected January retail sales in the U.S. Earnings from Nippon Sheet Glass also helped market sentiment.

Market Sentiment

In Tokyo trading Nikkei 225 rose 4.27% or 558.15 to 13,626.45, and the broader Topix Index increased 3.7% or 47.09 to 1,332.44.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 1.05 trillion yen were traded and in the second section 278 million shares valued at 314 billion yen changed hands.

Of the Nikkei 225 stocks 222 gained and 1 declined. Sumco Corp. led gainers with a rise of 13.98% followed by Taiheiyo Cement increasing 12.92%.

Fourth Quarter GDP Rises

The Cabinet Office reported today in the preliminary figures for fourth quarter GDP growth that the country’s gross domestic product increased to 0.9% from 0.8% in the third quarter.

In real terms, the domestic market contributed 0.5%, while exports contributed 0.4% and in nominal terms the domestic market contributed 0.2% and net exports added 0.5%.

According to the Cabinet Office, private consumption rose to 0.2% from 0.1% in the previous quarter in real terms and advanced 0.4% from zero growth in nominal terms in the third quarter. Household consumption also rose by the same figures both in real and nominal terms.

Fourth quarter private residential investment declined in real terms to 9% from 8.3% decline in the earlier quarter. Similarly, in nominal terms investment in the sector fell to 9.3% from a decline of 8.2%.

Conversely, non-residential real investment rose to 2.9% in the fourth quarter from 1.1% in the third quarter, while it jumped in nominal terms to 2.7% from 1.3% from the previous quarter.

Public demand also rose as well in the three months to December from 0.1% to 0.8% in real terms and gained 0.3% from 0.2% in nominal terms.

Furthermore, declines in public investment slowed to a loss of 0.7% from a fall of 1.9% in the quarter earlier period in real terms. In nominal terms, it also narrowed to a loss of 0.4% from a loss of 1.6%.

Exports in the fourth quarter were unchanged at 2.9% in real terms, but fell marginally to 1.7% from 2% a quarter ago in nominal terms.

Imports increased to 0.5% in real terms from a decline of 0.1% in the previous quarter and gained 3.5% from 0.1% in the previous quarter in nominal terms.

U.S. Retail Sales Unexpectedly Rise

The U.S. Commerce Department reported yesterday that retail sales rose 0.3% in January. Economists were expecting a fractional decline. Higher sales of gasoline, apparel, and automobiles lifted retail sales. Economists are still expecting retail sales to decline in 2008 as consumers battle rising food and energy prices, stagnant wages, falling home values, and tight credit markets.

Construction Machinery Set to Increase

Japan’s Construction Equipment Manufacturers Association shipments of excavators, tractors, cranes and other construction machinery may rise to 2.6 trillion yen in the fiscal year beginning in April. In the fiscal 2007, the industry recorded a sale of 2.35 billion yen and exported 66% of its production.

The Chairman of the association, Hiroo Shimada said in a message for the New Year and published on the association’s website, “Demand in North America alone decreased by almost 20% over the previous year, affected by a reduction in housing starts. On the other hand, demand in China increased by 40%; the markets in India, the Middle & Near East and Russia also expanded; and demand in Europe steadily increased. The world market, as a whole, grew substantially.


Yen Gains

The yen gained 1.03% to 108.29 from 108.32 against the dollar.

Gainers and Losers

Sumco Corp. led gainers in the Nikkei 225 index stocks with a rise of 13.98% followed by gains in Taiheiyo Cement of 12.92%, in Nippon Sheet Glass of 11.83%, in Advantest Corp. of 11.61%, and in Pioneer Corp. of 10.60%.

Advantest Corp rose after Applied Computers projected higher demand in the next quarter.

Nippon Sheet Glass advanced after income in the nine months ended December 31st increased from 28.2 billion yen to 60.8 billion yen driven mainly by increased sales in Europe as the sales from Pilkington Plc were added to the company sales. Sales in the same period edged up 34% to 648.7 billion yen from a year ago.

Sky Perfect JSAT led decliners in the Nikkei 225 index shares with a drop of 2.27% followed by a loss in Shiseido Co. Limited of 1.83%.

International Markets

In Tokyo Nikkei 225 Index closed higher 558.15 or 4.27% to 13,626.45, in Hong Kong Hang Seng index increased 852.13 or 3.68% closed to 24,021.68. Australia ASX 200 index increased 142.70 or 2.57% to close 5,684.80.

In South Korea Kospi Index increased 65.67 or 4.02% to close at 1,697.45, in Thailand SET index closed higher 2.70 or 0.33% to 832.11 and Indonesia JSE Index increased 64.86 or 2.48% to 2,675.65. Sensex index in India increased 817.50 or 4.82% to 17,766.63.

[R]3:00AM New York, 7:00PM Sydney - ASX 200 index rose 2.6% after Rio Tinto reported sharply higher earnings.[/R]

Market Sentiment

ASX 200 index gained 2.6% or 142.7 to close at 5,684.80 as financial markets in Asia rallied.

The Preliminary market turnover was 1.55 billion shares worth $7.49 billion, with 666 stocks moving up, 534 moving down and 343 unchanged. The most actively traded stock was Telstra with 84.43 million shares worth $398.74 million.

Market Driver

Rio Tinto shares closed up 4.5% after the company reported net income in 2007 of $7.3 billion on sales increase of 32% to $33.5 billion. Rio Tinto net income declined 2% from a year ago, but operating income increased to $13.9 billion, 11% rise from a year ago.

Chairman Paul skinner said, “With supply side constraints across the mining industry unlikely to ease in the near future, commodity prices are expected to stay high by historic standards in 2008 and well beyond.

The strong increases seen in global minerals demand are driven by demographic and economic fundamentals in fast-growing countries like China and India, whose large populations continue to urbanise. These long term trends are driven by domestic developments, and are therefore largely insulated from any potential near term weakness in western economies.”

The company increased the dividend by 31% and plans to increase it further by 20% in 2008 and 2009.

Gainers and losers

Of the ASX 200 index stocks, AED Oil led the gainers with a rise of 40.8% followed by increases in Paladin Energy of 13.2%, in Timbercorp Limited of 11.7%, in Arrow Energy Limited of 9.8%, and in Straits Resources Limited of 9.7%.

Of the ASX 200 index stocks, Boom Logistics led the decliners with a fall of 11% followed by losses in Centro Retail Group of 9.7%, in Challenger Finance of 8%, in Leighton Holdings of 5.56% and in Macarthur Coal of 5.1%.

MFS open up to City Pacific

Australian fund manager, MFS Ltd today opened its books to a rival, Brisbane-based City Pacific that put in a more than $1 billion bid in January.

City pacific is worth $472 million at today''s close while MFS''s market value dropped to $479 million on Jan. 18 before it suspended trading in its shares. City Pacific shares rose 0.3%.

Santos halts production at two fields

Australian oil and gas producer, Santos Ltd today announced that it had halted production at its Legendre and Stag oil fields off Western Australia on Monday due to a cyclone which may curtail daily 15,000 barrels of oil production. The news of the production curtailment was first reported by AAP in Australia and Bloomberg. Santos said its other operations in the Timor Sea, including the Bayu Undan, Challis and Elag oil and gas fields were unaffected.

Prior to the work stoppage Mutineer-Exeter oil field was producing at reduced rates of between 4,000 and 5,000 barrels per day.

Santos'' stock gained 0.9%.

Zinifex barred from processing acceptances

The Takeovers Panel today ordered Zinifex Ltd to stop processing acceptances for its $745 million bid for Allegiance Mining following allegations that shareholders were misled.

Allegiance told Takeovers Panel that three of its shareholders, including the company''s second largest - Lion Selection Group Ltd - were misled when accepting a takeover offer from Zinifex.

According to the interim order published on the website of the Takeover Panel and signed by Alan Shaw, Counsel, with authority of John Fast, President of the Sitting Panel, “Zinifex not take any further steps to process the acceptances of Lion Selection Group Limited, Andrew Lambert and Caroline Lee and the Andrew Lambert and Caroline Lee Superannuation Fund received by Computershare Investor Services Limited on 8 February 2008, or dispose of or otherwise deal with any of the shares the subject of the Acceptances.”

The order to not process stays till the earlier of the proceedings determination or two months after the date of this order from the Takeover Panel.

Zinifex stock rose 5.7%.

Straits Resource mulls assets sales

Australian copper and gold mining company, Straits Resources Ltd hinted today that it might sell some metal assets as it plans a fivefold increase in output of the fuel in Indonesia as reported by AAP and Bloomberg.

Chief Executive Officer Milan Jerkovic told reporters by phone that an asset sale was under review and that decide which gold or copper assets may fit in the portfolio.

Straits Resources owns two copper mines, Tritton and Whim Creek, as well as the Hillgrove and Mount Muro gold mines. The plans come after Straits completed the $350 million purchase of a second Indonesian coal mine in December and bought a coal project in Madagascar last month.

Straits Resources'' stock rose 9.7% after reporting a threefold increase in its estimate of coal resources at its Sebuku mine in Indonesia.

Lion Nathan expects increased income

Australia''s second-largest brewer, Lion Nathan Ltd forecasted that its annual net income would be between $265 million and $275 million for the 12-months ending September 30. In November the company had predicted earnings between $270 million and $280 million, which excluding the recent acquisition of J. Boag.

Leighton records 32% rise in profits

Australia''s largest engineering and construction company, Leighton Holdings Ltd today announced a 32% rise in its first-half profit on the back of contracts it won to develop mines, roads and airport terminals.

Net income climbed to $250.3 million, or 90 cents a share, in the six months ended December 31, from $190 million, or 68.3 cents, on total sales of $6.5 billion.

The company''s shares fell 5.5%.

Commonwealth Bank of Australia defends rate rise

The Commonwealth Bank of Australia today said its decision to raise mortgage rates by more than last week''s central bank rise was justified and added that it may revise the rates again.

The company''s shares recovered in trading today gaining 1.8% after falling to a 52-week low yesterday.

Allco defers release of first half results

Allco Finance Group Ltd today announced to delay its first half results to Monday next week.

The company said its shares would remain in voluntary suspension. API, a private investor and Allco''s largest shareholder was forced by two of its margin lenders to dump 46% of its holding in the group. Separately an investment company made an offer to purchase Allco at a price of $2.70 per share.

The margin calls were triggered by a run on Allco''s shares, on the growing investor concern about the level of debt used in its investment strategy.