LUNCH TIME REPORT

Australian shares gained at the open of trade, The All Ordinaries index rose 35points to 4,357. After U.S. market tracked higher overnight, concerns about the European debt situation are still floating around but a sense of calm has hit the Australian markets today.

At lunch time the All Ordinaries index rose 33points to 4,355. All market sectors are moving higher. After yesterday's big sell off in the mining stocks our lead miners are recovering today. The retail sector continues to move higher helped by the Reserve Bank of Australia's (RBA) 25bp or ¼ of 1 percent rate cut to 4.25pct yesterday. Our big 4 banks all higher today and Macquarie Group (MQG) up near 2pct so far.

Brazil´s largest mining company, and one of the world's largest, Vale SA has agreed to a lower fixed price of iron-ore shipments in for delivery in the current quarter by 20%-25%, due to a fall in spot prices of iron ore and lower demand, rumours and talk of this cut pushed our big miners lower yesterday and on overseas exchanges overnight. Today BHP Billiton Limited (BHP) is up 1.47pct to $37.25. Rio Tinto Limited (RIO) up 1.3pct to $66.41 and Fortescue Metals Group Ltd (FMG) up 1.7pct to $4.90.

Newcrest Mining Limited (NCM) our lead gold player under pressure again today off another 1.7pct to $33.42, after falling over 4pct yesterday on a weaker gold price.
Energy stocks are a little higher after oil prices held around US$101 a barrel overnight. Woodside Petroleum Limited (WPL) up 0.75pct to $33.73 and Whitehaven Coal Limited (WHC) still boosted by merger talks up another 2pct.

The retail sector up 0.6pct, Woolworths (WOW) up 1.1pct or $25.50 and Metcash Limited (MTS, formerly Metcash Trading) also higher, whilst Wesfarmers Limited (WES), the owner of Coles, Kmart and Bunnings, under pressure off 11cents or 0.34pct to $32.09.

Elsewhere, Telstra Corporation Limited (TLS) up 0.9pct to $3.24 and biopharmaceutical company CSL Limited (CSL) up 0.95pct to $32.26. Entertainment firm Crown Limited (CWN) up 1.7pct to $8.36 and Qantas Airways Limited (QAN) up 1.8pct to $1.65.

Official data showing the Australia´s economy grew by 1pct over the 3rd Quarter, the September Quarter, of 2011 has just been released. The result beat the expected growth target of 0.8% helped by strong business investment especially in the mining sector. Growth in Queensland surpassed all other states in the September quarter boosted by spending on mining and the rebuild after the flood disaster earlier in the year.

The Australian dollar is now worth 102.68 USc and 76.57 euro cents.

Craig James, Commsec Chief Economist

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