Sydney, Dec 23, 2008 AEST (ABN Newswire) - US stocks closed lower overnight on the slump figures of corporate earnings and retail sales as well as deteriorating US commercial property values. Meanwhile, more bleak news as Toyota's forecast its first ever operating loss and falls in most world markets also weighed on the Wall Street.

Yesterday, the Australian shares closed lower as investors were leaving the market before Christmas. On Monday, the benchmark S&P/ASX200 index was down 58.3 points, or 1.61%, at 3557.4 points, while the broader All Ordinaries index was 54.9 points, or 1.55% lower, at 3492.3 points. Analysts said the loss was larger than expected, and the negative news from the world markets would impact on the local market.

On the Sydney Futures Exchange, the March Share Price Index futures contract was down 25 points at 3528.

The Australian dollar has opened firmer as rises in base metal prices boosted the commodities-driven currency. At 0700 AEDT, the Australian dollar was trading at $US0.6841/49, up from Monday's close of $US0.6816/22.

Oil prices continued to tumble overnight as reports from manufacturers like Toyota and Caterpillar pointed to a worsening global economic climate and serious deterioration in energy demand. Light, sweet crude for February delivery fell $US2.45, or nearly six per cent, to settle at $US39.91 a barrel on the New York Mercantile Exchange.

Key Economic Facts and Figures

Sales of new motor vehicles in Australia slid 5.2% in November, the Australian Bureau of Statistics said on Monday, the fifth straight month of falls and further confirmation of the weakness of consumption. In November, 75,592 vehicles were sold on a seasonally adjusted basis, down from 79,778 in October and the lowest result since April, 2003. Sales were down a steep 17.8% from the same month a year earlier.

Australia's mergers and acquisition market is expected to worsen in 2009 as the global financial crisis continues to batter the confidence of dealmakers, according to consulting firm KPMG. The research shows there were more than A$62 billion in merger and acquisition deals involving Australian companies over the past 12 months, and it will take until 2010 before any meaningful recovery occurs in the takeover market.

M&A News

Coal seam gas explorer Pure Energy Resources Ltd(ASX:PES) has agreed to be taken over by Arrow Energy Ltd(ASX:AOE) in a cash-and-scrip deal that values the target at about A$490 million. Arrow Energy is already Pure Energy's largest shareholder with a 19.9 per cent stake.

Ports and rail operator Asciano Group(ASX:AIO) is assessing a number of bids to buy a half share in the coal haulage business of its Pacific National rail freight operations that could reap it up to A$1 billion. Asciano has been looking to sell around 50% of the Pacific National coal business, which analysts estimate is worth around $2 billion in total.

Upstream oil and gas company Otto Energy Limited (ASX:OEL) has entered into a conditional heads of agreement with BHP Billiton Petroleum Pty Limited to farm out 60% of its interest in Service Contract (SC) 55.

Melbourne-based drug researcher Avexa(ASX:AVX) is to acquire Brisbane-based Progen Pharmaceuticals(ASX:PGL) in an A$82 million friendly all-scrip takeover that will see Melbourne become home to one of Australia's biggest biotechs.

AGL Energy(ASX:AGL) said in a statement that it is in discussion concerning a possible material transaction. Sydney Gas(ASX:SGL) is expected to be the takeover target.

Important Corporate News

Manganese miner OM Holdings(ASX:OMH) says it will incur a loss of over A$13 million after it has closed out another foreign exchange contracts with a value of $US85.4 million as Consolidated Minerals beefs up its interest in the company.

Japan Oil, Gas and Metals National Corp (JOGMEC) said on Monday it has started joint exploration for uranium with Australia's Bondi Mining Ltd(ASX:BOM). Under the terms, JOGMEC has the right to earn a 51 percent stake in the project by paying A$3 million of exploration costs over a four-year period.

1. Related Stocks - Mid Market (AEST 1230)
Code   %Change   Volume   Turnover     Low   High
ASX:AIO +4.41  2,098,889  $2,971,585   136   146
ASX:PES +5.14  670,962    $3,083,719   450   472
ASX:AOE +6.66  1,364,796  $2,749,946   197.5 210
ASX:PGL -3.28  462,338    $334,725     68.5  74
ASX:OEL +16    618,075    $85,340      13.5  14.5
ASX:AVX +1.26  510,587    $40,998      7.9   8.4
ASX:OMH +2.5   54,634     $54,236      97.5  104
ASX:BOM +30.43 29,500     $885         3     3
2. Top 10 ASX on Turnover - Mid Market (AEST 1230)
Code   %Change   Volume   Turnover     Low   High
ASX:BHP -3.1   4,517,020  $136,472,255 2872  2943
ASX:CSL -.87   1,522,872  $50,595,338  3280  3350
ASX:CBA +1.51  1,668,896  $47,469,560  2716  2779
ASX:RIO -2.67  1,165,605  $43,813,799  3621  3749
ASX:WBC -2.14  2,396,789  $40,929,617  1636  1711
ASX:NAB +.45   1,395,402  $28,339,885  1966  2011
ASX:LGL -.7    9,821,065  $27,849,941  279   289
ASX:NCM +1.49  844,439    $27,175,484  3168  3270
ASX:ANZ -1.21  1,745,078  $25,889,149  1457  1485
ASX:WDC +2.99  1,822,852  $23,486,988  1270  1309


Michelle Liang
Asia Business News Asia Bureau
Tel: +61-2-9247-4344

Related Companies

Sydney Gas Ltd        
Pure Energy Resources Limited        
Progen Pharmaceuticals Limited       
Otto Energy Limited         
Om Holdings Limited          
Bondi Mining Limited       
Avexa Limited        
Asciano Group          
Arrow Energy        
AGL Energy Ltd         

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