Australian Stocks Fall on Bank Worries

123jump.com Staff
20 Jan, 2009
New York City

Australian slipped 3.1% on weakness in financial stocks. Royal Bank of Scotland estimated the largest recorded loss of 28 billion of any British company. A decline in commodities prices led to another round of losses in miners and metal makers.

[R]3:00AM New York, 7:00PM Sydney - Bank woes drag Australian stocks.[/R]

Australia stocks slipped 3.1% on weaknesses in financial stocks after U.K. bank Royal Bank of Scotland cautioned that its annual loss will soar to a record £28 billion, the largest ever recorded by a British company.

According to Australia & New Zealand Banking Group, the MarkitiTraxx Australia index, which gauges the likelihood of default, also rose 5 basis points to 310.

Commodity stocks also declined on falling metal and crude oil prices.

In Sydney trading ASX 200 index plummeted 3.1% or 112.7 to 3,476.60.

Of the ASX 200 index stocks, 20 advanced, 170 dropped, and 10 were unchanged. Minara Resources led gainers in the index shares with a rise of 4.8% followed by Platinum Australia increasing 3.4%.

New Zealand Consumer Prices Fall 0.5%

Statistics New Zealand reported that the country''s consumer price index declined 0.5% in the three months to December from the previous quarter, as petrol prices tumbled 22.4%, representing the largest individual contribution.

Petrol prices also dropped 4.8% for the year.

However CPI increased 3.4% for the year to the December quarter.

The food group price index made the largest upward contribution, adding 1.5% from the previous quarter and 9.4% from a year ago, with meat, poultry and fish gaining 6.3% and grocery food 2.6%.

Housing and household utilities advanced 0.6%, recreation and culture 1.5%, overseas package holiday 7.5% and electricity 2%.

Statistics New Zealand also said price for the purchase of new housing declined 0.2% in the three months to December.

Global Credit Crunch Disturbs Asset Divestiture

Dow Jones Newswires reported today that Rio Tinto Energy chief executive officer Preston Chiaro said the company''s planned divestiture of its $15 billion worth of assets is affected by the current global credit crunch.

An estimated $10 billion assets are expected to be sold by the end of 2009.

Chiaro said despite the large number of buyers, most were not able to raise the required cash.

“We are pushing ahead with the sale process of assets but the problem is with (buyers) financing the purchase of those assets,” said Chiaro.

Gainers & Losers

Minara Resources led advancers in the ASX 200 index shares with a rise of 4.8% followed by gains in Platinum Australia of 3.4%, in Stockland of 2.6%, Incitec Pivot Ltd. of 2.5%, and Sigma Pharmaceutical of 2.5%.

Karoon Gas Australia led decliners in the ASX 200 index shares with a fall of 13.3% followed by losses in Babcock & Brown of 11.8%, in Acquarius Platinum of 10.5%, in Fortescue Metals of 9.2%, and NRW Holdings of 9.1%.

Babcock & Brown and other financial stocks slipped on fears that banks will be hard hit by the current credit market crunch after Royal Bank of Scotland warned that it might record its biggest annual loss at £28 billion this year.

Commodity stocks also fell as gold prices shed $9.40 to $830 per ounce and crude oil prices tumbled $1.80 to $34.60 per barrel. Linc Energy declined 8.8% and Roc Oil dropped 7.4%.