Australian Stock Market Report - Midday 3/6/2012

LUNCHTIME REPORT
(12.40pm AEDT)

The Australian share market has started the trading day in the red, following weak offshore leads and after China downgraded its 2012 growth forecasts. China has cut its target for economic growth in 2012 from 8pct to 7.5pct, a move which wasn't overly surprising but has given investors a reason to sell. At lunchtime in the East, the All Ordinaries Index (XAO) is down 29.9pts or 0.7pct to 4324.3.

Mining stocks are under the most pressure following weakness on the London Metals Exchange in response to China's downgrade. Shares in index leader BHP Billiton (BHP) have fallen 2.2pct to $34.60 while Rio Tinto (RIO) is down 1.9pct to $63.85.

Financial stocks are generally firmer ahead of this afternoon's interest rate decision, although the Commonwealth Bank (CBA) is trading down 0.4pct to $48.88.

No change is expected to the official cash rate of 4.25pct when the Reserve Bank of Australia hands down its monthly decision at 2.30pm AEDT this afternoon. The Australian dollar is buying US106.81c ahead of the announcement.

Juliette Saly, CommSec Market Analyst

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