Australian stocks: Market closes lower, pulled back by Commonwealth Bank

UPDATE - The Australian stock market went backwards despite a strong start today as weakness among the major banks outweighed gains by the resources sector and global media player News Corp.


The Commonwealth Bank, which went ex-dividend today, was the top traded stock by volume and was the biggest drag upon the market.


"That's the main pull," said ABN Amro Morgans senior client adviser Tony Dennis.


Mr Dennis said trading on the market today was pretty much a reversal of the pattern last week where money was sucked out of resources and other stocks into the banks after a strong profit result from the Commonwealth Bank.


"Generally the banks are down today," Mr Dennis said.


"The initial reaction to the Commonwealth Bank's result was a little over-exuberant, and at the same time you've got hawkish commentary coming out of the RBA (Reserve Bank of Australia) suggesting that a move in interest rates may occur sooner rather than later.


"And that's not good for lending."


Mr Dennis said investors were returning to miner BHP Billiton, ahead of that company's expected good result on Wednesday.


"I think their result (BHP Billiton's) will put the banks into the shade," Mr Dennis said.


The benchmark S&P/ASX 200 index fell 24.1 points, or 0.58 per cent, to 4150.2, while the all ordinaries dropped 17.7 points, or 0.43 per cent, to 4143.0.


On the Sydney Futures Exchange, the March share price index contract was 13 points lower at 4141 - a 9.2 point discount to the underlying index - on a volume of 14,190 contracts, according to preliminary calculations.


In the banking sector, the Commonwealth fell $1.30 to $35.30, with $30.4 million of its shares changing hands.


The ANZ reversed 47 cents to $21.18. It cranked up its cash earnings forecast today but warned that times are tough, with new entrants in New Zealand pushing down margins to win market share.


The National Australia Bank was 30 cents off at $29.67 and Westpac gave away 21 cents to $19.69.


The Bendigo Bank lost 40 cents to $10.00 as it said it planned to raise $100 million for future growth and buy back up to five million shares.


Among resources stocks, BHP Billiton was up 23 cents to $16.90, Rio Tinto put on 60 cents to $43.00, Alumina was nine cents richer at $5.80 and takeover target WMC Resources was five cents weaker at $7.65.


Oil and gas producer Woodside Petroleum was 25 cents heavier at $20.95 and Santos added eight cents to $9.27.


Oil Search, Papua New Guinea's largest oil and gas producer, slipped two cents to $2.04 after it was forced to curtail production to carry out repairs to its floating export terminal.


In the media sector, News Corp improved 15 cents to $22.40 while its non-voting stock climbed 13 cents to $21.53.


Elsewhere in the media sector, Publishing and Broadcasting was off 14 cents at $15.86 and Fairfax dipped three cents to $4.49.In the gold sector, Newmont nudged up one cent to $5.32, Newcrest lifted 26 cents to $16.80 and Lihir was steady at $1.09. the price of gold in Sydney at 1640 AEDT was US$422.25 per fine ounce, up $4.125 on Friday's close.

Retailer Coles Myer descended nine cents to $9.22 and supermarket rival Woolworths retreated 14 cents to $14.77.

Telco Telstra scraped off one cent to $5.26 and Optus-owner Singapore Telecommunications hovered at $2.02.

Broadband provider Unwired was down nine cents at 60 cents as it said revenue growth would continue into the second half but remained coy on its ambition to expand its services beyond Sydney to other major capital cities.

Among other stocks, building products firm James Hardie Industries NV dumped 21 cents to $6.63 after it reiterated its earnings guidance for the full year but warned it would continue to be adversely impacted by legal costs associated with its asbestos issues.

Clay products and investment company Brickworks ascended 31 cents to $12.00 after it said it expected to continue solid growth and expansion, weathering challenging conditions.

Australia's biggest float so far this year, the $1 billion listed investment vehicle Babcock & Brown Capital Ltd, hit the boards of the stock exchange at a discount and closed at $2.33.

The Babcock & Brown Capital IPO involved the issue of 200 million shares at $5.00 each, payable in two instalments of $2.50 - with the second payment yet to occur.

Shares in WebCentral Group Ltd jumped 19 cents to $1.64 after the technology investment company announced a strong lift in first half profit and said it expected growth to continue in the second half.

The top traded stock by volume was the Commonwealth Bank, with $30.4 million shares worth $994.44 million changing hands.

Preliminary national turnover was 1.05 billion shares worth $4.1 billion, with 730 stocks up, 830 down and 433 unchanged.

- AAP