Aussie stocks plunge despite Wall St rally

1 Dec 2008, 7:43 pm   -   Source: AAP
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The Australian share market has closed weaker on subdued trading despite a rally on Wall Street and expectations the Reserve Bank of Australia will cut interest rates this week.

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The Australian share market closed weaker on subdued trading despite a rally on Wall Street and expectations the Reserve Bank of Australia will cut interest rates this week.
 
Weaker resource and banking stocks weighed heavily on the local bourse.

At 1615 AEDT, the benchmark S&P/ASX200 index was 61.3 points or 1.64 per cent into negative territory at 3681.2, while the broader All Ordinaries had lost 53.7 points or 1.46 per cent, at 3619.

On the Sydney Futures Exchange, the December share price index futures contract eased 28 points to 3703 points on volume of 21,031 contracts.

"Our market has been marked back by the strong end to last week, said Shaw Stockbroking head dealer Jamie Spiteri.

"Obviously the US was fairly quiet toward the end of last week, and therefore there was a reduction in activity across most global markets."

A shortened session on Wall Street after Thursday's Thanksgiving holiday had the Dow Jones Industrial Average rally 102.43, or 1.17 per cent, to close at 8,829.04 points - the fifth consecutive gain for blue chips.
 
"Rio Tinto is noticeably weaker and BHP is drifting back," Mr Spiteri said.

Rio Tinto sank by $3.90, or 8.37 per cent, to $42.70, while BHP Billiton backtracked $1.10, or 3.55 per cent, to $29.90.

By contrast, Fortescue Metals Group spiked 44 cents, or 21.36 per, cent to $2.50 on speculation that BHP Billiton may make a takeover bid after abandoning its mega-merger with Rio Tinto Ltd last week.
 
After receiving a speeding ticket from the Australian Securities Exchange, Fortescue said it was not aware of any information that could explain the share price movement.

Banks also lost ground, falling at least two per cent across the sector by 1615 AEDT before Tuesday's interest rate announcement by the Reserve Bank of Australia.

Economists forecast the central bank would cut the interest rate by between 100 and 125 basis points, Mr Spiteri said.

Westpac finished 95 cents, or 5.31 per cent lower, at $16.94 after St George Bank shares were transferred to Westpac as the final implementation in its $15 billion takeover.

Commonwealth Bank lost $1.09 or 3.2 per cent, to $33.00, while National Australia Bank fell 57 cents, or 2.85 per cent, to $19.43 and ANZ Banking Group backtracked 42 cents, or 2.84 per cent, to $14.38.

"We saw fairly strong gains toward the end of last week and some of those gains are being pared back today," Mr Spiteri said.

Insurers were mixed, with QBE gaining 19 cents to $23.94 and Insurance Australia Group easing four cents to $23.94 after saying it will offload 30 per cent of its life insurance asset in Malaysia to UK insurer Friends Provident plc for 170 million Ringgit (RM) ($A71.72 million).

Retailers were also mixed, with David Jones firming seven cents to $2.57, Woolworths gaining 50 cents to $27.30 and The Reject Shop easing one cent to $9.64.

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