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Investors spooked by eurozone jitters

27 Feb 2013 THE AGE
BY MAX MASON


THE sharemarket finished lower on Tuesday, weighed down by fears of eurozone instability as Italian election results fail to show any clear winner.

Having fallen as much as 1.5 per cent in early trade, the benchmark S&P/ASX 200 Index finished just above 5000, down 52.2 points, or 1 per cent, to 5003.6, while the broader All Ordinaries fell 50.9 points, or 1 per cent, to 5021.8.

After starting the week off on a positive note, investors were spooked by the inconclusive Italian election results. The market might be worried about the implementation of austerity measures, aimed at holding the country's finances together, with a negotiated or minority government.

"We haven't really seen Europe rear its ugly head ... we know it's an issue, we know it's quantifiable, but this just puts it back in investors' faces again," said RBS Morgans trader Luke McElwaine.

He said there had been significant resistance at the 5000 level, but it also proved there was support to continue to consolidate at this level.

The resources sector was hit doubly hard, as cyclone Rusty forced the closure of Port Hedland, a major terminal for iron ore exports out of Western Australia. Despite the closure, which would lower world supplies, iron ore prices slipped 1.1 per cent to $US151.90 a tonne.

BHP dropped 1.5 per cent to $36.35, Fortescue Metals lost 2.9 per cent to $4.61 and Rio Tinto, which had its outlook downgraded to negative by ratings agency Standard & Poor's, fell 0.9 per cent to $65.57.

Atlas Iron slipped 3.4 per cent to $1.545 after the up-and-coming miner reported a $256 million first-half loss caused by a number of write-downs in the value of its assets.

Virgin Australia shares lost 5.8 per cent to 41¢ after the airline failed to commit to a tripling of Tiger's Australia-based fleet, one of the conditions of taking a controlling stake in the budget airline. On top of this, Virgin reported a 56 per cent fall in first-half net profit to $23 million.

Shares in Ramsay Health Care jumped 1 per cent after reporting a 10.1 per cent increase in net profit. The private hospital operator indicated it was keen on expanding to help meet the demands of Australia's ageing population.

QBE, as well as confirming a plan to shed 700 jobs, reported an 8 per cent rise in full-year profit.

However, the result failed to impress investors as the insurance provider's shares fell 2.2 per cent to $12.75.

A $47 million first-half loss caused by weak coal prices, among other issues, weighed on Whitehaven Coal shares, which slumped 3 per cent to $2.91.

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