Bad end to a bad year

The Australian share market closed lower today, despite a positive start, finishing the financial year substantially weaker.

Resources and gold stocks strengthened today but weakness among the major banks weighed upon the bourse.

At the close, the benchmark S&P/ASX200 index had fallen 21.7 points, or 0.41%, to 5215.3 while the broader All Ordinaries surrendered 16.5 points, or 0.31%, to 5332.9.

The September share price index futures contract dropped 46 points to 5216 on a total volume of 29,845 contracts, according to preliminary calculations.

ABN Amro Morgans private client adviser Simon Ferguson said the market opened strongly on positive news from investment firm Babcock & Brown, which gained $1.14 cents, or 17.92%, to $7.50.

Babcock & Brown was freed from a market capitalisation review clause linked to its financing facilities after agreeing to pay down $400 million of debt from asset sales.

"But the US (markets) were still weak on Friday, and the financial stocks are still coming under pressure,'' Mr Ferguson said.

"There still seems to be tax-loss selling around, and later this week you've got a shortened week in America and non-farm payroll data, which the market has been sensitive to of late.''

The Australian market finished the 2007/08 financial year around 17% lower - its worst annual performance since fiscal 1982.

Mr Ferguson said the subprime mortgage crisis in the US and subsequent global credit crunch had the biggest effect on markets worldwide over the year, and rocketing oil prices exacerbated investors' concerns.

In the resources sector today, global miner BHP Billiton gained 81 cents to $43.70, and Rio Tinto added $3.46 to $135.50.

Macarthur Coal descended $1.13 to $16.87 as ArcelorMittal increased its interest in the company and Korean steelmaker Posco reportedly also took a stake in the coal miner.

Zircon producer Iluka Resources was steady at $4.71 as it secured an alternative gas supply to power its West Australian operations and warned that the Varanus Island energy crisis would affect its financial performance.

Oil and gas producer Woodside Petroleum was 21 cents richer at $67.50 but Santos sagged 27 cents to $21.45.

Roc Oil Company slipped 2 cents to $1.685 as it said it was well placed to keep its business moving following the sudden death of John Doran, the company's founder and chief executive.



Among the major banks, NAB lost 20 cents to $26.50, Westpac dumped 69 cents at $20.00, ANZ retreated 23 cents to $18.72, and Commonwealth Bank shed 33 cents to $40.17.

On Wall Street overnight, the Dow Jones industrial average dropped 106.91 points to 11,346.51 as investors fretted that record oil prices and the seemingly endless credit crisis would further damage the economy.

In the gold sector, Newcrest gained 41 cents to $29.30, Newmont put on 5 cents at $5.42 and Lihir firmed 9 cents to $3.29.

Gold explorer Dragon Mountain Gold picked up 6 cents to 41 cents as it defined a maiden 1.1 million ounce gold resource at the Zhao Gou deposit in central China.

The price of gold in Sydney at 4.31pm was $US928.50 per fine ounce, up $US13.75 on Friday's close of $US914.75.

Among media stocks, publisher APN News & Media fell 3 cents to $2.98 after saying it expected flat net profit for the first half of calendar 2008 in a challenging market.

News Corp was off 73 cents at $16.45 and its non-voting stock stepped back 66 cents to $16.14.

Consolidated Media nudged up 1 cent to $3.30 and Fairfax gained 3 cents to $2.93.

In the telcos sector, Telstra shrank 11 cents to $4.24 and Optus-owner Singapore Telecommunications was off 3 cents at $2.79.

Hutchison Telecommunications (Australia) was steady at 10 cents after it increased the value of its capped mobile plans, aiming to steal market share from its competitors.

In the retail sector, Wesfarmers, which owns Coles, dumped 25 cents to $37.30. Woolworths fell 57 cents to $24.45.

Among other stocks, medical diagnostics provider Sonic Healthcare was steady at $14.55 as it acquired Clinical Laboratories of Hawaii for $US121 million ($A126.04 million).

Rewards and discounts provider The Rewards Factory had a negative trading debut, closing at 15 cents, 5 cents below its issue price of 20 cents.

The top-traded stock by volume was gemstone producer Cluff Resources, with 148.49 million shares worth $2.69 million changing hands. Cluff was 0.3 cents higher at 1.9 cents.

Preliminary national turnover was 2.52 billion shares worth $7.28 billion, with 795 stocks down, 651 up and 350 unchanged.