Shares pare back losses

The Australian share market closed lower today after a big drop on US markets and a surge in the oil price to more than $US140 a barrel overnight.

On the domestic bourse, the major banks and big miners were weaker, but gold stocks surged after the price of the precious metal rose above $US900 per fine ounce.

At the close, the benchmark S&P/ASX200 index had fallen 70.0 points, or 1.32%, to 5237.0 while the broader All Ordinaries lost 72.1 points, or 1.33%, to 5349.4.

The September share price index futures contract was off 60 points at 5253, on a volume of 37,257 contracts, according to preliminary calculations.

Austock senior client adviser Michael Heffernan said although the Australian market was weaker today, it had put in a "workmanlike'' performance, falling less than half as much as its US counterpart.

"The reasons for the fall in the US were pretty much US-focused,'' Mr Heffernan said.

"I don't think they had the elements of transmissions to other markets.''

Mr Heffernan said there were still concerns about the rising oil price, which could push up prices elsewhere in the economy and lead to lower levels of activity.

The market was still being influenced by tax-loss selling as the financial year drew to a close.

Among resources stocks, global miner BHP Billiton was down $1.06 at $42.89,and Rio Tinto sagged $4.14 to $132.04.

Oil and gas producer Woodside Petroleum was 88 cents richer at $67.29, and Santos added 57 cents to $21.72.

Oil refiner Caltex Australia fell 19 cents to $12.50 as it said it expects its first half net profit to slump up to 40% after flat petrol sales, lower margins and plant shutdowns and narrower refiner margins affected earnings.

In the banking sector, NAB was down $1.36 at $26.70 as it urged the government to cut taxes on bank deposits to reduce its funding costs.

Westpac fell 70 cents to $20.69, Commonwealth Bank dropped 40 cents to $40.50, and ANZ reversed 5 cents to $18.95.

Elsewhere in the financial services sector, fund manager City Pacific shed 5 cents to 34 cents as it cut its operating earnings outlook by as much two-thirds after its exposure to the global credit crunch.

On Wall Street overnight, the Dow Jones Industrial Average dropped 358.41 points, or 3.03%, to 11,453.42 after a broker downgrade of banking giant Citigroup and tepid forecasts from big tech firms Oracle and Research in Motion as well as sporting goods giant Nike.



In the gold sector, Newcrest soared $2.99, or 11.54%, to $28.89 as it said it had secured sufficient energy supplies to maintain full production at its flagship Telfer gold mine in Western Australia following an explosion that cut gas supply from Varanus Island earlier this month.

Newmont lifted 14 cents to $5.37 and Lihir gained 18 cents to $3.20.

The price of gold in Sydney at 4.30pm was $US912.50 per fine ounce, up $US26.20 on yesterday's close of $US886.30.

In the retail sector, Warehouse Group eased 10 cents to $3.40 after it cut its 2008 annual net profit guidance by about 10% amid continuing tough economic conditions in New Zealand.

Supermarket operator Woolworths ascended 49 cents to $25.02 as global investment house Merrill Lynch reduced its annual earnings forecasts for Woolworths but said the retailer was still in great shape.

Wesfarmers, which owns Coles, was up 13 cents at $37.55.

Among media stocks, News Corp was 50 cents lower at $17.18 and its non-voting stock stepped back 46 cents to $16.80.

Consolidated Media was 6 cents poorer at $3.29, and Fairfax lost off 1 cent to $2.90.

Among the telcos, Telstra was down six cents at $4.35 as it expanded its interests in internet advertising in China by acquiring a majority stake in two businesses.

Optus-owner Singapore Telecommunications slipped 3 cents to $2.82.

Among other stocks, childcare provider ABC Learning rose 12 cents to $1.15 as it considered selling its British nurseries business along with the already-announced sale of its vouchers business.

Market debutante and gold explorer Nobel Mineral Resources closed at 30 cents, 10 cents above its issue price of 20 cents.

The top-traded stock by volume was Telstra, with 81.12 million shares worth $358.5 million changing hands.

Preliminary national turnover was 2.13 billion shares worth $10.43 billion, with 791 stocks down, 548 up and 367 unchanged.

AAP