Market treading water as Cyprus ructions cast a pall

The market closed almost exactly where it began this week, losing less than one point, despite continuing concerns about Cyprus' banking system.

The market closed almost exactly where it began this week, losing less than one point, despite continuing concerns about Cyprus' banking system.

For the week, the benchmark S&P/ASX 200 Index fell 0.8 points to 4966.5, while the broader All Ordinaries Index fell 0.9 points to 4979.9 points.

Attention was focused on Cyprus for the second full week in a row, with increased scrutiny of its troubled banking system.

The trading week began with investors waiting to see if European authorities had come up with a crucial last-minute deal to secure some sort of bailout agreement for the island nation.

The week before, Cyprus had fallen into serious trouble when an original bailout deal - hammered out by authorities such as the International Monetary Fund - had imposed a levy on Cypriot bank deposits to force the country to contribute to a multibillion-euro rescue package. Then global markets were seriously unsettled when that deal was rejected.

This week, global markets rallied briefly after Europe's leaders struck a late deal to prevent a meltdown in the Cypriot banking system. But then they were struck again, this time by reports that the bailout deal could be used as a blueprint for other stricken European nations.

Despite all this, currency traders said foreign exchange markets had already moved on.

"Cypriot residents will feel the fiscal pain for a long time but foreign exchange markets are already looking elsewhere in Europe, where Italy's political farce is back on the front pages," said Robert Rennie, Westpac's chief currency strategist.

"It's Italy we are more worried about. The political story in Italy does not look good. After anti-establishment party Five Star rejected its offer of an alliance, Democratic Party leader [Pier Luigi] Bersani was quoted as saying 'only an insane person would want to govern this country, which is in a mess'. He has a point."

Interestingly, Australian shares have fallen 2.7 per cent in March, following three consecutive months of gains from December to February. In that time the market rose a cumulative 13 per cent.

For the week, Woodside Petroleum lost $1.12 to $35.82. Australia's energy players are looking at offshore gas processing to ensure resources such as the Browse and Scarborough fields are exploited.

Kathmandu Holdings rose 10¢ to $2.05 after it defied difficult retail conditions to post a hefty rise in first-half profit as new stores did well and online sales grew.

Leighton Holdings rose 34¢ to $20.54, after the troubled company elevated Bob Humphris to chairman. The construction giant is seeking to put the sudden resignations of three directors behind it.

Nufarm lost 79¢ to $3.95. Shares have plunged after the agricultural chemicals supplier's profit fell 53 per cent. Qantas rose 8.5¢ to $1.78. The airline is free to pursue its plan to revive its struggling international arm after the ACCC gave the green light to a partnership with Emirates.

Sundance Resources was placed in a trading halt and last traded at 21¢. Hanlong's troublesome takeover of Sundance Resources looks to be almost dead.

Westfield Group rose 9¢ to $10.85. The shopping centre developer will sell a 49.9 per cent stake in six shopping malls in Florida to O'Connor Capital Partners for $US700 million.

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