Aussie stocks give back early gains

MELBOURNE - The Australian share market closed slightly higher on Wednesday, pulled back from earlier strong gains by reports that China was putting the brakes on new lending.

The quieter finish contrasted with an earlier surge on the back of a better than expected December quarter production report by BHP Billiton.

At the 1615 AEDT close, the benchmark S&P/ASX200 index had risen seven points, or 0.14 per cent, to 4,868.2 points, while the broader All Ordinaries index had added 5.5 points, or 0.11 per cent, to 4,895.1 points.

On the Sydney Futures Exchange, the March share price index futures contract was off one point at 4,842 on volume of 27,513 contracts, according to preliminary calculations.

IG Markets research analyst Ben Potter said reports from China had pulled back the market from its surge following the BHP Billiton production report.

"It was a pretty solid open, with the financial and materials sectors adding good points, but then about midday those reports came out of China," Mr Potter said.

"So we saw most people in the materials space run for the exits."

Mr Potter said the reports suggested that some banks in China had been told to stop all lending for the remainder of the month after a burst of credit in the first couple of weeks.

"It's another sign the Chinese economy is running at full steam," he said.

"Obviously attempts to slow it will be met by short-term weakness, but in the long run this should be seen as a positive as it helps prevent the economy from overheating and asset bubbles from forming."

In the resources sector, BHP Billiton rose 10 cents to $43.41 as it reported a surge in fourth-quarter production, with strong Chinese demand sparking record output of key commodities.

Rio Tinto gained nine cents to $78.04.

Mineral sands miner Iluka Resources was steady at $3.49 after it recorded a 37.5 per cent drop in sales revenue in calendar 2009 but said revenue increased appreciably in the second half.

Lithium and potash miner Orocobre jumped 45 cents, or 32.14 per cent, to $1.85 after it unveiled a deal with Japan's Toyota Tsusho Corporation to develop a flagship project in Argentina.

Oil and gas producer Woodside Petroleum was down 25 cents at $46.50 and Santos eased seven cents to $13.63.

Among the major banks, National Australia Bank was steady at $27.45, Westpac lost 22 cents at $25.48, Commonwealth Bank slipped eight cents to $56.56, and ANZ improved seven cents to $23.27.

On Wall Street on Tuesday, the Dow Jones Industrial Average index lifted 115.78 points, or 1.09 per cent, to 10,725.43.

In the gold sector, Newmont was eight cents higher at $5.21, Newcrest was 55 cents lower at $35.40, and Lihir sagged six cents to $3.27.

The price of gold in Sydney at 1622 AEDT was US$1134.30 per fine ounce, down US$2.27 on Tuesday's closing price of US$1136.57.

Telco Telstra firmed two cents to $3.35, and Optus-owner Singapore Telecommunications was two cents richer at $2.34.

Retailer Woolworths nudged up one cent to $27.51 and Wesfarmers, which owns Coles, improved five cents to $30.67.

In the media sector, News Corp was up four cents at $17.03 and its non-voting stock lifted five cents to $14.48.

Consolidated Media found one cent at $3.06 and Fairfax ascended five cents to $1.87.

Among other stocks, winemaker Cockatoo Ridge Wines called in voluntary administrators amid fears it would become insolvent in its third quarter. Cockatoo Ridge last traded at 0.3 cents.

MAP Group lifted 19 cents to $3.10 after Sydney Airport's passenger numbers jumped in December, helping achieve a small gain for 2009, on strong international traffic.

The top-traded stock by volume was biotech OBJ, with 176.88 million shares worth $7.57 million changing hands. OBJ was 0.5 cents higher at 4.3 cents.

Preliminary national turnover was 2.68 billion shares worth $4.76 billion, with 546 stocks up, 544 down and 377 unchanged.

- AAP