Australian stocks: Markets end down 0.3 pct, News Corp sags

Australian stocks fell on Monday, wary about the passage of war in Iraq and weighed down by a weak News Corp on worries about a possible $7 billion pricetag for U.S.-based takeover target DirecTV.

The benchmark S&P/ASX 200 index .AXJO lost 8.2 points or 0.3 per cent to 2,858.5 on volume worth A$2 billion ($1.2 billion), steady compared with Friday's flows. "The market is just not at all rational at the moment and it will probably remain that way until the conflict ends, if and when that is," said David Spry, research manager at FW Holst.

Shares in News Corp NCP.AX NWS.N fell 3.2 per cent to A$10.92 after British newspaper The Observer reported the media giant was poised to make a $7 billion bid for Hughes Electronics' GMH.N DirecTV as early as this week.

Also pressuring News Corp, investors tend to use the stock as a proxy for Wall Street and quickly sell it down if weakness on US markets is expected.

Woodside Petroleum WPL.AX fell 2.2 per cent to A$10.92 and Rio Tinto RIO.AX fell 1.4 per cent to A$32.83, while BHP Billiton BHP.AX rose one cent to A$9.40 as investors reacted skittishly to developments in and around Iraq.

Engineering contractor Downer EDI DOW.AX advanced 8.3 per cent to A$0.52 after it bought an engineering consultancy firm from Singapore state investment company Temasek Holdings for S$131 million ($77 million).

Downer said the purchase of Temasek subsidiary CPG Corp would be earnings per share positive from day one and would help boost projected 2004 earnings by 15 per cent.

Keeping AMP Shopping Centre Trust ART.AX in play, Westfield Trust WFT.AX said it had bought a 16.9 per cent "strategic" stake in the trust for A$247 million or A$1.80 per unit.

AMP Shopping Centre Trust rose 6.5 per cent to A$1.80 as the most actively traded security, and have risen 30 per cent since mid-March, while Westfield Trust rose 1.2 per cent to A$3.40.

Centro Properties CEP.AX launched a hostile takeover bid last week for the trust in an offer that equated to A$1.63 per unit. Centro shares rose 1.9 per cent to A$3.80.

Other listed property trusts also won flows as investors looked for steady yields with the added attraction of possible takeover premiums.

Deutsche Industrial Trust DIT.AX rose 3.6 per cent to A$1.72 and ING Industrial IIF.AX rose 1.8 per cent to A$1.70.

"The Friday night rally was based on good news, since then we've had signs of casualties, talk of slower outcomes plus pretty ordinary economic news out of the United States," said Hans Kunnen, head of investment markets research at Colonial First State Investment Managers.

"That's put a dampener on markets and the United States will probably follow the Australian lead. I was surprised, to some extent, by the extent of the rally," he said.

US economic data, lost in the noise of war news, showed the annual rate of core inflation slowed to 1.7 per cent - its lowest level since March 1966 - which suggested inflation was no impediment to a further easing of interest rates by the US Federal Reserve in the event of further economic weakness.