Australian Stock Market Report – Midday12/17/2012

MID-SESSION REPORT
(12.30pm AEDT)

Local stocks have started the trading week in the red, despite reports the US House of Representatives could be one step closer to averting the Fiscal Cliff.

US House of Representatives Speaker John Boehner has reportedly opened the door for talks on tax hikes for wealthy Americans, removing a major stumbling block in Fiscal Cliff talks. The reports have sent the Dow Jones Futures Index up 88pts, suggesting a 0.7pct gain when US markets open tonight.

At lunchtime in the East, the All Ordinaries Index (XAO) is down 7pts or 0.2pct to 4588.1.

Financials stocks are coming off today, with shares in Westpac (WBC) down 1.1pct to $26.50 and the ANZ (ANZ) weaker by 1pct to $24.42.

Mining stocks are generally firmer, with index leader BHP Billiton (BHP) up 0.8pct to $26.35 and Rio Tinto (RIO) up 0.4pct to $63.24. Fortescue Metals Group (FMG) is rallying after the iron ore miner said it is contemplating selling a small interest in its rail and port infrastructure. CEO New Power says FMG is in negotiations with potential investors in subsidiary The Pilbara Infrastructure. A sale would help ease FMG's massive US$6 billion debt burden, last week FMG announced it is getting rid of its non-core assets. FMG shares are firmer 2.8pct to $4.43, with FMG shares up 14pct so far this month.

Troubled surf-wear retailer Billabong (BBG) has reportedly received a $1.10 per share takeover offer from former Billabong director and former pro-surfer Paul Naude. BBG shares rallied by 5pct in early trade to 98c before being placed in a trading halt.

Fairfax Media (FXJ) is also having a strong session, up 3.9pct after announcing it will sell the remaining stake in the New Zealand based online auction and classifieds site Trade Me. FXJ will offload its 51pct holding, or about 202 million shares in Trade Me for $3.05 per share to raise $616 million with the deal to be underwritten by UBS New Zealand. FXJ plans to pay down its debt with the proceeds. Shares in Trade Me are in a halt, last at $3.22.

The Australian dollar is worth US105.45c, £0.6523 and €80.15c.

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