Business

Thu Jul 03 23:34:04 PDT 2008

(Adds details, comments)

By Geraldine Chua

SYDNEY, July 4 (Reuters) – Australian shares rose 1.7 percent on Friday, lifted by gains in heavyweight mining and banking firms, as five straight sessions of losses prompted investors for hunt for bargains.

Despite the rise, the benchmark S&P/ASX 200 index <.AXJO> fell nearly 3 percent on the week to log its seventh straight weekly decline, the longest such losing streak since July 2002.

Fund managers said pessimism about the outlook for equity markets has increased in recent weeks as oil prices continued to hit new highs, deepening concerns about weakening consumer confidence and slowing economic growth.

With those worries weighing on sentiment, it would be hard for the market to see a sustained rally, they added.

"The market definitely has a downwards bias at the moment. There is no conviction in buying, really," said Robert Hook, portfolio manager at SG Hiscock & Co.

"It’s going to take the oil price to cool down before people start getting excited about the market again."

Australia’s benchmark index rose 83.8 points to 5,082.1, based on the latest available data, after falling 1.9 percent to the lowest level since September 2006 in the previous session.

The index has fallen 19.8 percent since the start of the year after rising 11.8 percent in 2007.

New Zealand’s benchmark NZX-50 index <.NZ50> added 2.05 percent, or 63.49 points, to 3,157.92. Still, the index, which dropped to a three-year low in the previous session, has lost 21.9 percent so far this year.

The biggest stock, Telecom Corp of New Zealand <TEL.NZ>, closed up nearly 4 percent at NZ$3.41.

MINERS BOUNCE

Top miners rose, recovering from hefty losses in the previous session.

BHP Billiton Ltd <BHP.AX>, the world’s top miner and Australia’s top oil and gas producer, rose 2.2 percent to A$40.70, while its main rival and takeover target, Rio Tinto Ltd <RIO.AX>, gained 3.1 percent to A$125.70.

Chinese industry officials said on Friday that BHP has matched Rio Tinto’s near 100 percent price hike for 2008-2009 iron ore deliveries [ID:nSP9603].

The big banks all rose between 2.4 percent and 4.3 percent, extending gains for the third straight session as investors continued to take the view that the recent sell-off in the sector was overdone.

"I personally feel that the banks could suffer some more in the next couple of months but they are starting to look attractive," said SG Hiscock’s Hook.

Babcock & Brown Power <BBP.AX> climbed 18.2 percent to A$0.78.

The investment fund said it will sell its Uranquinty Power Station to energy retailer Origin Energy Ltd <ORG.AX> for an enterprise value of A$700 million ($673 million). Net proceeds of A$159 million from the sale will be used to reduce debt.

On the downside, Beadell Resources Ltd <BDR.AX> slumped 30 percent to A$0.28.

The firm scrapped its plan to buy the Cracow gold mine in northern Queensland state from Newcrest Mining Ltd <NCM.AX> and Lion Selection Ltd <LST.AX> as it was unable to complete an equity raising needed to fund the purchase due to tough market conditions [ID:nSYD18750]. ($1=A$1.04)

(Editing by Jonathan Standing)

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