Markets

Australia shares retreat from highs; Sigma rallies

MELBOURNE : Australian shares were up just 0.2 percent on Wednesday, off session highs as the Asian Development Bank tri
Published September 14, 2011

axeMELBOURNE: Australian shares were up just 0.2 percent on Wednesday, off session highs as the Asian Development Bank trimmed growth forecasts for the region, unnerving already cautious investors.

A rebound in stocks across Asia and the euro stalled, while gold edged up on Wednesday, as investors waited for convincing signs of progress on taming the euro zone debt crisis.

Australian shares are down 6 percent from September highs as investors prepare for the possibility of default on Greek sovereign debt and other financial shocks across Europe.

"Some of the European banks may have to recapitalise their balance sheets with government assistance. It's creating a lot of nervousness and uncertainty," said Simon Bonouvrie, portfolio manager at Platypus Asset Management.

"Here in Australia the corporate balance sheets are really strong. All the highly leveraged models have gone. But the market's getting sold off on sentiment around Europe and the European banks," he said.

The benchmark S&P/ASX 200 index was up 6 points at 4,078.7 by 0159 GMT. It rose 0.9 percent on Tuesday.

New Zealand's benchmark NZX 50 index rose less than a point to 3,286.3.

Australian shares had gained as much as 0.7 percent on Wednesday before the Asian Development Bank trimmed most of its 2011 and 2012 growth forecasts for the region while noting that Asia's emerging economies are showing resilience in the face of the darkening global environment. See

Earlier, Australian consumer confidence rebounded strongly in September, a survey showed on Wednesday, as lessening fears of a hike in interest rates helped offset turmoil on global markets. That followed hefty drops in August and July.

STOCKS ON THE MOVE:

Sigma rallied 14 percent to A$0.595, its highest in 18 months, after it beat analyst forecasts with an underlying net profit of A$27.9 million in the first half, and a dividend of 1.5 cents, bouncing back after a loss a year ago on strong growth in underlying sales.

0156 GMT

Resource shares mostly gained. BHP Billiton rose 0.6 percent while Rio Tinto added 1.3 percent on stronger copper prices.

Woodside Petroleum was up 0.4 percent, down from gains of over 1 percent in earlier trade.

Top banks pared gains, with three of the top four lenders up around 0.4 percent and Commonwealth Bank of Australia down 0.3 percent.

"Our banking system here in Australia is extremely strong and it's a different scenario to the GFC (global financial crisis). So while the banks here in Australia might get sold down on the sentiment issues that are occurring around the world, our banks are in a very healthy position," said Bonouvrie.

 

Copyright Reuters, 2011

 

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