Australia shares fall on miners, Orica slumps

Australia shares fall on miners, Orica slumps
Business & Markets 2013
Written by Reuters
Friday, 19 July 2013 10:31

SYDNEY (July 19): Australian shares fell 0.6 percent on Friday, dragged down by blue chip mining stocks and a slide in blasting systems supplier Orica Ltd after it cut full-year earnings guidance.

BHP Billiton Ltd and Rio Tinto Ltd lost 1.4 percent and 1.6 percent respectively after China steel futures edged lower. The shaky demand outlook in the world's top iron ore consumer cast doubt on the sustainability of miners' recent gains.

Orica slumped 14 percent to a four-year low of A$18.05 after the mining services company said it expected 2013 financial year net profit after tax (NPAT) to fall 10 percent on the year before.

The S&P/ASX 200 index lost 28.7 points to 4,963.5 in subdued trade, where 183.7 million shares had changed hands by 0136 GMT. The benchmark rose 0.2 percent on Thursday.

"It's the ongoing issue of what is the Fed going to do and how do we interpret it? And one day people are happy about it and other days they're not," said Damien Boey, equity strategist at Credit Suisse.

The market has rebounded from a trough of 4,632.3 points hit on June 25 as receding worries about the Federal Reserve tapering its quantitative easing programme bolstered investor sentiment.

However, it has not been able to break above resistance at 5,012, the July 12 high and the 61.8 percent retracement level of its fall from a five-year peak of 5,249.6, set on May 15, to the June low.

"I still think the market is going to go down, but what people would like to see is a real sign of stimulus from America and China. If you get that, then the market will crack above 5,000," Boey said.

The financial sector reversed early gains to drag on the index. Australia and New Zealand Banking Group Ltd and Westpac Banking Corp each shed 0.5 percent.

Elsewhere, defensives helped to pare losses. BioTECHNOLOGY [] company CSL Ltd added 0.5 percent while flagship telecommunications provider Telstra Ltd rose 0.8 percent.

New Zealand's benchmark NZX 50 index slipped 0.1 percent or 3 points to 4,560.4.

STOCKS ON THE MOVE

* Billabong International Ltd rocketed 13.7 percent to a 2-1/2 month high of A$0.415. The embattled surfwear company said it cannot accept a Centerbridge and Oaktree refinancing proposal.

Shares were high in response to its refinancing deal with Altona earlier in the week.

(0135 GMT)

* Santos Ltd tumbled 4.1 percent to A$13.67 after the company lowered its full-year production forecast.

(0135 GMT) - Reuters