China May Influence Iron Ore Price Talks

Darlington Musarurwa
16 Mar, 2010
New York City

The Australian benchmark index gained a fraction on a strength in precious metals. Reserve Bank of Australia guided a gradual increase in rate if the economy maintains its growth pace close to its long term expectations. ANZ plans to sell 10% in Vietnam Bank as it seeks open wholly owned branches.

[R]3:00 AM New York, 7:00 PM Sydney – The Australian benchmark index gained a fraction on a strength in precious metals. Reserve Bank of Australia guided a gradual increase in rate if the economy maintains its growth pace close to its long term expectations. ANZ plans to sell 10% in Vietnam Bank as it seeks open wholly owned branches.[/R]

Australian stocks were flat in directionless trading as the central bank noted that gradual rate increase are preferable and new turmoil in global financial markets stemming from euro zone crisis is not likely.

In Sydney trading ASX 200 Index edged up 0.3% or 13.1 to 4,797.20. Of the ASX 200 index stocks, 91 rose, 89 fell, and 20 were unchanged.

Sundance Resources led gainers in the index shares with a rise of 7.1% as gold prices increased 0.4% to $1,105 per ounce. Other resource stocks gained. Lihir Gold climbed 3% to A$3.06 and Avoca Resources advanced 2.4% to A$1.94.

The Australian dollar dropped 0.02% to 91.43 U.S. cents.

China may pursue trade sanctions and urged world iron ore miners to keep the interests of largest iron ore buyers in mind when negotiating the next round of price increase.

Ministry of Commerce spokesman Yao Jian told reporters in Beijing today that China is prepared to take actions to maintain the price stability.

Chinese steelmakers prefer annual price discussion and not the quarterly price increases as requested by the world’s largest mining companies including Australia based BHP Billiton and Rio Tinto Group and Vale SA of Brazil.

RBA Bets Turmoil in Europe As Unlikely

Reserve Bank of Australia reported in its minutes of the monetary policy meeting of the Reserve Bank Board that it elected to raise the key rate by 25 basis points to 4% on March 3 because economic data indicated that domestic economic growth will be close to the long trend.

The minutes noted that though there was a concern about the prospects of renewed turmoil in the markets because of the fiscal problems in Europe, the Board believed that “it was not the most likely one.”

In February, the RBA had paused interest rate hikes in order to establish further clarity about the strength and durability of the economic recovery that was underway.

“Members concurred that the appropriate course was to set policy as required by the most likely outcome, and to be ready to respond to other outcomes if they eventuated,” RBA noted in the statement.

ANZ to Sell 10% in Vietnam Bank

The Australian reported today that ANZ will shed 10% in Vietnam’s Sacombank in order to avoid a conflict of interest after it recently opened a wholly owned bank.

ANZ received approval from the State Bank of Vietnam in October 2008 to open its Vietnamese unit.

Sacombank’s management board will meet next week to discuss the sale and the final decision will be made by the end of the week.

Senate Defers Telstra Vote

The Australian Senate today deferred a vote on legislation that may split the company to the last day of the session on March 18.

Government intends to split from its fixed-line assets as the government seeks to build a A$43 billion high-speed Internet network known as NBN Co.

ASX Movers

St Barbara Limited led the decliners in the S&P ASX 200 index with a loss of 5.5% followed by losses in Gunns Limited of 4.4%, in Atlas Iron Limited of 4.3%, in GUD Holdings Limited 3.9% and in Spotless Group Limited 3.6%.

Sundance Resources Limited led gainers in the S&P ASX 200 index with a rise of 7.1% followed by gains in Adelaide Brighton Ltd 4.4%, in United Group Limited of 4.2% and in Paladin Energy Ltd of 3.2%.

Other Movers

Acrux Limited added 2.1% to A$2.43 after the pharmaceutical company and Eli Lilly and Company announced today that they have entered into an exclusive worldwide license agreement for the potential commercialization of Acrux''s experimental underarm testosterone solution.

Arrow Energy Limited fell 0.3% to A$5.23 after the company is in talks with Royal Dutch Shell plc and PetroChina Company Limited on their joint takeover offer worth at least $3 billion. Arrow is seeking higher valuation.

Liquefied Natural Gas Limited increased 2.9% to A$0.52 after it announced changes to the terms of sale of its Fisherman''s Landing project in Queensland.

Telstra Corporation Limited advanced 2.3% to A$3.11 after the telecom operator announced it has completed a €1 billion or A$1.50 billion Eurobond issue.