Australian Stock Market Report - Afternoon 10/21/2011

AFTERNOON REPORT (4.30pm AEDT)

The local share market traded virtually sideways today, as investors stayed out of the market ahead of a key meeting of European leaders at the weekend. The All Ordinaries Index (XAO) lost 3.4pts by close to 4203.4 while the S&P/ASX 200 Index (XJO) fell 3pts to 4141.9.

The European Union summit was expected to nut out a viable solution to the region's debt crisis, however overnight sources from Germany's coalition said it's unlikely a decision will be reached this weekend, with a follow up meeting to be held next Wednesday.

Over the course of the very volatile trading week, the Australian market dropped 1.5pct.

Financial stocks were mixed, with shares in the ANZ (ANZ) up 0.4pct to $21.21 and the Commonwealth Bank (CBA) down 0.4pct to $47.55. Macquarie Group (MQG) lost 2pct to $22.53.

Mining stocks also ended mixed. Shares in BHP Billiton (BHP) rose by 0.6pct to $35.70 while Rio Tinto (RIO) was off 0.5pct to $62.57.

Macarthur Coal (MCC) rose 0.9pct to $16.22 after Peabody Energy and ArcelorMittal appeared certain to take over the Queensland coking coal miner following an about-face from China´s CITIC. Analysts said the deal meant there were almost no independent coal miners left in Australia for foreigners to invest in. CITIC Resources Holdings and CITIC Group intend to accept the offer for Macarthur shares from PEAMCoal, the bidding vehicle for US miner Peabody Energy and the European steelmaker ArcelorMittal. The suitor´s ownership of Macarthur is now 49pct, with 50.01pct needed for a change of control. The $4.9 billion offer is for $16 per Macarthur share, which will increase to $16.25 if they achieve a 90pct stake by November 11. CITIC will earn $1.2 billion by selling its share.

Strong performers on the market today included David Jones (DJS), which rose 4.6pct to $3.16 and hearing implant maker Cochlear (COH) which added 4.6pct to $57.98.

The Australian dollar ended the day's trade at US102.44c, £0.6479 and €74.3c.

On the market overall, a total of 1.5 billion shares were traded, worth $4.1 billion. 471 were up, 470 were down and 353 were unchanged.

At 4.30pm AEDT on the ASX24, the futures contract was at 4159, up 3pts.

There is no economic data released in the US tonight.

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