Australian markets

The Australian share market closed lower on Tuesday, led downwards by the major banks as investors sat on the sidelines ahead of the federal budget on Tuesday. At the close, the benchmark S&P/ASX200 index was 31 points, or 0.65 per cent, lower at 4,725.8 points, while the broader All Ordinaries index fell 28.1 points, or 0.58 per cent, to 4,803.6 points. On the ASX 24, the June share price index futures contract was down 46 points at 4,718 points, with 34,669 contracts traded, according to preliminary calculations.

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Among the major banks, National Australia Bank fell 20 cents to $27.64, ANZ lost 32 cents at $23.07, Westpac dipped 46 cents to $23.60 and Commonwealth Bank eased 45 cents to $52.20. In the resources sector, BHP Billiton dumped 22 cents to $44.53 as it said it would spend around $260 million to extend a diamond mine in northern Canada. Rio Tinto backtracked 36 cents to $79.65. Magnetite iron ore producer Grange Resources was off 0.5 cents at 66 cents after it said its Southdown project at Albany in Western Australia would cost $2.57 billion to develop. Steel producer OneSteel sagged 11 cents, or 5.16 per cent, to $2.02 after it lowered its profit guidance for the second half of 2010/11 due to the higher Australian dollar, lower sales and margins, and bad weather.

Beef producer Australian Agricultural Company fell 10 cents, or 6.45 per cent, to $1.45 as it completed an oversubscribed $56.3 million equity placement. Agricultural chemicals supplier Nufarm lifted 25 cents, or 5.24 per cent, to $5.02 as Japan-based Sumitomo Chemical Company said it intends to further lift its stake after buying 4.5 million shares from Nufarm chief executive Doug Rathbone. Shares in the demerged wine operations of Foster's Group, Treasury Wine Estates, opened at $3.21 on their first day of trading and closed at $3.36. Shares in the "new" Foster's, which holds the beer operations, opened at $4.55 and closed at $4.53. Preliminary national turnover was 2.38 billion shares worth $5.07 billion, with 624 stocks down, 479 up and 380 unchanged.

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The Australian dollar erased much of a U.S. session rally in Asian trading Tuesday as a surging trade surplus in China dented sentiment ahead of key inflation data there Wednesday. In the currency markets, traders mostly looked through the budget story to focus on the impact of a series of reports on China due out in coming days. In the first of those reports, China's April trade surplus blew out to US$11.4 billion from March's US$139 million, far above the forecast US$1.0 billion. The report was particularly damaging for the Australian dollar ahead of crucial Chinese inflation data due Wednesday. The Australian dollar was changing hands at $1.0747, down slightly from $1.0751 late Monday. Against the yen, it was at 86.505, down from 86.71.

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