Interest rate fears mark zigzag week

Shares continued their erratic behaviour yesterday, falling sharply for the second time in three days as the market fretted over the extent of future interest rate rises.
The S&P/ASX200 index slipped back below the 5000 mark, dropping 49.5 points to 4958.3 while the All Ordinaries index was down 43.8 points to 4932.7 at the close of trade.
Nomura Australia equities strategist Eric Betts said that despite the large daily movements in the indices this week, the market was directionless overall ahead of an expected interest rate rise next week.
The All Ords finished the week less than 2 points behind its finish the previous week as news of accelerating inflation stoked interest rate fears.
"Overall we've just been going sideways," Mr Betts said. "It will be another few months before it's clear whether another (interest rate rise) is needed."
He said it was a good environment for day traders: "We are telling people to buy on the zigs and sell on the zags."
Interest rate-sensitive stocks again took the brunt of the selling. The big four banks lost ground with Westpac sinking 39c to $21.93, ANZ losing 38c to $25.10, the Commonwealth Bank dropping 45c to $44.65 and National Australia Bank down 8c to $35.67.
The local losses followed weakness on Wall Street where Microsoft, the world's largest software maker, led the market lower.
The Dow Jones industrial average dropped 2.08 points to 11,100.43 while the Standard & Poor's 500 index slipped 5.20 points to 1263.20.
The Nasdaq Composite index fell 15.99 points to close at 2,054.47.
On the local market the big miners also lost ground with BHP Billiton slipping 41c to $27.70 and Rio Tinto down 48c to $74.61.
Mining equipment retailer Emeco made a disappointing market debut with its shares closing 10.5c below the issue price at $1.795.
Rupert Murdoch's News Corporation gave up 33c to end at $25.79 while the non-voting stock dropped 11c to $24.86.
Other media stocks were also weaker with Publishing and Broadcasting tumbling 44c to $17.09, Fairfax sliding 11c to $4 and Seven Network dipping 19c to $8.78.
Oil and gas stocks were mixed with Woodside Petroleum falling 25c to $43.00 while Santos climbed 16c to $11.58 despite news that a mystery bidder could rival its offer for Delhi Petroleum.
Mayne Pharma surged 26c to $2.76 after the drug maker lifted its profit guidance on the back of strong sales of its anti-cancer drugs.
Pacifica Group sank 35c to $2.12 after the car-parts maker said it had rejected a proposed takeover bid of $2.40 a share following discussions with an unnamed party.
And Lion Nathan fell 7c to $7.91 as the beer and wine group confirmed its underlying earnings guidance for fiscal 2006.
The big food and liquor retailers were weaker with Coles Myer falling back 10c to $11.70 and rival Woolworths dipping 15c to $18.85.
Telstra eased 1c to $3.79 while Optus owner Singapore Telecommunications moved 1c in the opposite direction to $2.12.
Emeco was the top traded stock by volume with 64.45 million shares worth $116.86 million changing hands, according to preliminary calculations.
Preliminary market turnover was 1.12 billion shares worth $5.34 billion with 475 stocks rising, 576 falling and 319 unchanged.