Australian Stock Market Report – Midday 6/28/2012

LUNCHTIME REPORT
(12pm AEST)

Local stocks are gaining traction for a second consecutive session, following gains on US and European markets overnight. Positive US housing data boosted sentiment, although volumes were low in Europe ahead of a key European Union summit kicking off tonight in Brussels. At lunchtime in the East, the All Ordinaries Index (XAO) is up 18.8pts or 0.5pct to 4102.8.

Materials and financial stocks are leading the gains, with shares in Rio Tinto (RIO) firmer by 1.2pct to $55.74 and the Commonwealth Bank (CBA) firmer by 1pct to $52.68.

In the energy space, shares in Santos (STO) are down 5.2pct to $10.47 after the company revealed a $2.5 billion cost blow-out at its LNG project in Queensland.

Media stocks are once again dominating headlines. Australia's richest woman and the largest shareholder of Fairfax Limited (FXJ) has today been denied a seat on the company's board after she announced she will not agree to the charter of editorial independence adopted by Fairfax. FXJ shares are down 1.4pct to $0.5475.

Meanwhile, a formal announcement outlining a separation of News Corporation's (NWS) key businesses is set to be announced today. It's understood the Board has met in New York and agreed in principle to the split, which will see the lucrative entertainment business separate from the publishing arm, which is suffering brand damage in the wake of last year's News Of The World phone hacking scandal. NWS shares have today hit a four year high, up 3.4pct to $22.24.

Elsewhere today, grocery wholesaler Metcash (MTS) has been placed in a trading halt, as it attempts to raise $325 million to purchase the rest of Mitre 10 it doesn't already own. MTS today announced a full year profit of $90 million. MTS last traded at $3.74.

The Australian dollar is buying US101.16c, £0.6491 and €80.97c.

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