Weak Lending in Australia, Rio Tinto Sells Mines

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

Stocks in Australia gained on a rise in gold price. Despite a decline in interest rate and significant increase in lending availability from the Reserve Bank of Australia, the lending fell 0.3% in December. Separately, Rio Tinto sold its iron ore mine and potash assets for $1.6 billion.

[R]3:00AM New York, 7:00PM Sydney - Australian lending falls 0.3% in December. Rio Tinto sells potash assets and iron ore mine for $1.6 billion to Vale.[/R]

Australian stocks recovered in late afternoon trading to end 1.5% higher after initial losses that were precipitated by anxiety over next week''s corporate earnings announcements and crucial economic data from the U.S.

Precious metals miners rallied after a steep rise in gold price of $16.50 to $906.50 per ounce.

However energy stocks trimmed the advance as crude oil prices fell 72 cents to $41.1 per barrel. In Sydney trading ASX 200 index increased 0.4% or 14.5 to 3,540.70, rising 5.9% for the week.

Of the ASX 200 index stocks, 90 gained, 91 declined, and 19 were unchanged. Nexus Energy led gainers in the index stocks with a rise of Nexus Energy after gold prices jumped $16.5 to $ 906.5 per ounce.

Other gold stocks rallied. Sino Gold advanced 5.8% and Lihir Gold soared 5.7%.

Australian Lending Drops 0.3% in December

Reserve Bank of Australia reported today that total credit provided to the private sector by financial intermediaries slipped 0.3% in December from an increase of 0.4% the previous month.
Total credit dropped the most since 1992 dragged by a 1.1% decline in business credit as foreign denominated lending fell.

However, total credit gained 6.7% in 2008.

The RBA also noted that M3 money supply declined 0.1% and broad money supply fell 0.5% in December, while broad money supply grew 10.1% in 2008.

Rio Tinto Sells Potash Assets and Iron Ore Mine to Vale

The Australian News reported today that Rio Tinto has agreed to sell its undeveloped potash assets- including Potasio Rio Colorado in Argentina- and Corumba iron mine in Brazil to Brazilian miner Vale for $1.6 billion.

Rio says no regulatory approvals are required for the unloading of the undeveloped potash asset, while the sale of its Corumba iron ore mine in Brazil and associated river logistics operations in Paraguay require regulatory approvals.

Rio''s chief financial officer Guy Elliott said the sale is part of a restructuring to reduce company debt by $10 billion in the current year.

Gainers & Losers

Nexus Energy led gainers in the ASX 200 index shares with a rise of 13.6% followed by increases in Sundance Resources of 12.8%, in Straits Resources Ltd. of 11.6%, in FKP Property of 11.1%, and Sigma Pharmaceuticals of 9.1%.

Alesco Corp. led decliners in the ASX 200 index shares with a fall of 10.5% followed by losses in Macquarie Office of 9.5%, in Aquila Resources Ltd of 6.9%, in IOOF Holdings Ltd. of 6.9%, and Babcock & Brown of 6.5%.

Energy stocks slipped as crude oil prices dropped 72 cents to 41.1 per barrel. Roc Oil declined 4.7%, Linc Energy shed 4.5% and Panoramic Resources plunged 6.2%.

Fortescue Iron Ore Production Rises 19%

Fortescue Metals reported today that iron ore output advanced 9% to 8.4 million tons in the three months to December from the previous month. In the period, the company shipped 6.3 million tons and forecasts that annual shipments will increase to 30.7 million tons.

The miner estimated the iron ore production to rise to 23.8 million tons in the second half of the financial year.