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Sharp fall on metals markets hits local bourse

THE sharemarket finished lower yesterday, pulling back from a week-long rally.

THE sharemarket finished lower yesterday, pulling back from a week-long rally.

The market opened half a per cent weaker after sharp falls on overseas metals markets and a poor start to the US reporting season overnight.

The benchmark S&P/ASX200 index closed 23.3 points, or 0.55 per cent, lower at 4204.3, while the broader All Ordinaries fell 22.4 points, or 0.52 per cent, to 4266.4.

IG Markets analyst Cameron Peacock said the bourse was due for a pullback after the rally during the past week.

But he was optimistic the market wanted to move higher.

"Throughout the day, I noticed that every time we saw a bit of weakness, we'd gravitate back to the 4200 level. That tells me that there is a lot of conviction in the rally," he said.

"Certainly we've got the catalyst for a sustained rally to year end."

Energy stocks fell the most, down 1.1 per cent, despite oil prices rising for the fifth straight session in New York on Tuesday.

Woodside Petroleum fell 23? to $35.36, Santos slipped 17? to $12.49 and Oil Search shed 11? to $5.95.

City Index chief analyst Peter Esho said uranium stocks had helped buoy the resources sector recently on speculation the industry was consolidating.

He said they were now dragging the sector down after uranium producer Energy Resources Australia announced plans to raise $500 million in a discounted issue of $1.53 per share. ERA shares were in a trading halt and last traded at $3.29.

Mining giant BHP Billiton fell 31? to $37.08 after it approved $US1.2 billion in pre-commitment capital for the first phase of the Olympic Dam mine expansion in South Australia.

Fellow miner Rio Tinto lost 54? to $67.46. Fortescue Metals fell 1.9 per cent to $4.72.

Consumer staples and consumer discretionary stocks were among the few sectors to gain ground, with Woolworths up 30? to $24.92.

Consumer electronics chain JB Hi-Fi rose 3.5 per cent, or 49?, to $14.36, despite telling investors at its annual meeting that comparable first quarter sales had dropped 3.5 per cent.

Tabcorp rose 11? to $2.71 after it reported first quarter revenue rose by 2.7 per cent to $759.4 million compared to the same period last year.

Gold closed at $US1666.90 an ounce in Sydney, down $US11.65.

Market turnover was 1.61 billion shares worth $4.46 billion.


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