Australian shares down at noon on investor fears

Published in the Daily Telegraph, August 2011

THE Australian share market was lower at noon (AEST), extending morning losses as nervous investors continued to react to weaker US and European markets on the back of fears of a second recession.

At 1201 AEST, the benchmark S&P/ASX200 index was down 115.4 points, or 2.7 per cent, lower at 4,135.8, while the broader All Ordinaries index was down 114.9 points, or 2.7 per cent, at 4,204.5.

On the ASX 24, the September share price index futures contract was down 116 points, or 2.8 per cent, at 4,103, with 36,094 contracts traded.

Wealth Within analyst Janine Cox said investors were on a knife's edge as information from US and European governments about the sovereign debt crisis got released slowly over time.

"It's been going on for long enough now that everyone knows there are risks still out there and the banks are as much at risk as any other company out there in the market right now in terms of their earnings and exposure to changes in what's going on because of the Europe and the US situation.''

"At the moment, with everyone being a bit sensitive to the debt situation overseas, we are going to follow (offshore markets) and our banks will be susceptible to that as well because they have exposure overseas.(For example) NAB has exposure in the UK.''

Among the banks, ANZ fell 75 cents, or 3.7 per cent to $19.67 despite its trading update that its underlying profit for the nine months to June was up 16 per cent at $4.2 billion and that it had good reason for optimism in Australia, New Zealand and Asia.

Westpac was 59 cents, or 2.9 per cent, lower at 19.79, while National Australia Bank was 65 cents, or 2.8 per cent weaker at $22.51. Commonwealth Bank lost $1.35, or 2.9 per cent, to $45.97.

Most bank stocks across Europe were underperforming in already fragile markets on Thursday, led by British bank Barclays and French bank Societe Generale, with losses of 11.5 and 12 per cent, respectively.

Ms Cox said the market was at risk of further decline in afternoon trade.

"I don't think it's going to get too far in the short-term, in the next couple of weeks. I think the market's going to be quite volatile into October, even.''

Making news in Australia on Friday, Santos was 37 cents lower to $11.31 despite reporting a first half profit almost double the prior corresponding period, and Fortescue Metals was down 27 cents, or 4.5 per cent to $5.78, after posting annual profit also almost double the previous year.

Billabong shares fell $1.00 or 19.3 per cent to $4.17 after the surfwear retailer posted an 18 per cent fall in annual profit.

At 1200 AEST Global miner BHP Billiton lost $1.20, or 3.1 per cent, to $37.90 and Rio Tinto was $2.79, or 3.8 per cent, lower at $70.55.

However, at 1201 AEST the price of gold in Sydney was $US1,833.8 per fine ounce, up $US39.70 from Wednesday's local close at $US1,794.1.

Shares in gold miner Newcrest Mining were up at 1200 AEST by 31 cents to $38.97.

Preliminary national turnover was 1.12 billion shares worth $2.53 billion, with 127 stocks up, 873 down, and 233 were steady.

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