LUNCHTIME REPORT
(12.40pm AEDT)

The Australian share market is trading in the red at lunchtime in the East, following weakness in offshore markets. The US Dow Jones Index eased from four year highs overnight on news China has raised fuel prices for the second time in less than six weeks, raising concerns about overall economic growth. The Australian share market eased half a percent in early trade but has clawed back a little, and at 12.40pm AEDT is down 10.7pts or 0.2pct to 4354.9.

Retail stocks are under the most pressure, following profit declines from both upmarket retailer David Jones (DJS) and outdoor wear retailer Kathmandu (KMD). David Jones has predicted its full year profit will fall by 35 to 40pct after its first half profit came in at the lower end of guidance. Profit for the six months was down 20pct to $85 million, while the interim dividend payment has been decreased from $0.13 to $0.105 per share. DJS shares are down 10pct in early trade to $2.45. Meanwhile Kathmandu has seen a slide in first half profit due to lower margins and higher costs. KMD shares are down 13.8pct to $1.285, with the company announcing it plans to undertake a more aggressive marketing campaign to boost revenue in the second half. Luxury handbag maker Oroton (ORL) has defied the retail doom and gloom, posting a small rise in first half profit. Growth at its Oroton branded stores rose five percent in the period, while its Ralph Lauren brand grew by 6pct. However Oroton shares are down 3.6pct in early trade to $8.70.

Mining stocks remain under pressure on concerns about slowing Chinese economic growth, and following comments from BHP Billiton (BHP) that Chinese demand for iron ore is faltering. BHP shares are down 1.3pct in early trade to $34.87.

The Australian dollar has also fallen victim to Chinese growth worries, with investors buying back into the greenback. The AUD fell to US104.75c in early trade, and at 12.40pm is worth US105.1c, £0.6621 and €79.24c.