Australian Borrowing Costs Down; ASX Up 1.1%

123jump.com Staff
29 Dec, 2008
New York City

The difference between the rate Australian banks charge each other for three-month loans and the overnight swap rates decline nine basis points to 49 points. Reserve Bank of Australia has poured A$650 million into the money market after forecasting a surplus of A$4.1 billion.

[R]3:00AM New York, 7:00PM Sydney- Futures mistake pares Sydney gains.[/R]

Australian market averages rose spurred by commodity stocks as metal prices gained on escalating conflict in the Middle East between Hamas and Israel.

Stocks rallied after the March share price index futures contract soared 415 points, or 12%, to 4002 in the first 30 seconds of trading. 400 contracts were traded during the 30-second period.

Market watchers said a futures trader may have left open a stop order to buy futures or an algorithmic trade – an automatic computer trade - might have been set without a price limit.

However the market tumbled after the mistake was discovered at around mid-morning.

The Australian Securities Exchange said 54 contracts had been cancelled.

In Sydney trading ASX 200 index rose 1.1% or 38.9 to 3,621.10.

Of the ASX 200 index stocks, 126 gained, 62 declined, and 12 were unchanged. Lynas Corp. led gainers in the index shares with a rise of 31.4%.

Rio to Discuss Mining Concessions with New Guinea leader

The Australian reported that Rio Tinto said today although the mining concession for its Simandou iron ore project remains valid, it will seek further clarification on the project''s status with Guinea''s new leader Captain Moussa Dadis Camara.

Guinea announced recently that it will renegotiate mining contracts after the military seized control following the death of President Lansana Conte.
A spokesman for Rio Tinto said, “We believe that they both remain valid and we also believe that we followed due process and have fulfilled all our obligations and commitments. A meeting with the new president and his team is a high priority for us.”

Australian Borrowing Costs Fall

Australian Financial Markets Association reported today that the difference between the rate Australian banks charge each other for three-month loans and the overnight swap rates declined nine basis points to 49 points.

Separately Reserve Bank of Australia today injected A$650 million into the money market after forecasting a surplus of A$4.1 billion.

Gainers & Losers

Lynas Corp. led advancers in the ASX 200 index shares with a rise of 31.4% followed by increases in Tishman Speyer of 20.7%, in Valad Property of 18.4%, in Platinum Australia of 13.8%, and Kagara Ltd. of 13%.

Commodity stocks soared after gold prices increased $23.20 to $871.2 per ounce and crude oil prices soared $2.36 to $37.7 per barrel on uncertainty in the Middle East after hostilities escalated between Hamas and Israel.

Company News

ANZ Signs Up Subaru Australia

ANZ and Subaru announced today that the former''s retail arm Escanda will sign up Subaru Australia after the financing agreement between the latter and eneral Motors Acceptance Corporation Australia (GMAC) expires on April 16.

The Australian government formed a special purpose vehicle (SPV) on December 5 to cater for car dealers facing financial difficulties, especially after the withdrawal of GE Money Motor Solutions and GMAC out of the local dealer floor plan financing market.