Australian stocks: Market down after rate cut

MELBOURNE - The Australian share market closed lower on Tuesday as the central bank cut interest rates to their lowest level in nearly 50 years.

At the 1615 AEST close, the benchmark S&P/ASX200 index was down 50.3 points, 1.34 per cent, at 3706.3, and the broader All Ordinaries index shed 47.9 points, or 1.3 per cent, to 3648.5.

On the Sydney Futures Exchange, the June share price index futures contract was 45 points lower at 3719 on a volume of 24,705 contracts, according to preliminary calculations.

ABN Amro Morgans private client adviser Trent Muller said the RBA's interest rate cut met market expectations half way.

"The market's probably a little bit annoyed that they (the RBA) didn't go the full tilt," he said.

The Reserve Bank of Australia (RBA) cut the cash interest rate on Tuesday by 25 basis points to 3.00 per cent, from 3.25 per cent.

The market was split between those expecting no cut and those anticipating a cut of half a percentage point.

RBA governor Glenn Stevens said the Australian economy was contracting although by less than the economies of the nation's trading partners.

Mr Muller said resources stocks weighed upon the market on Tuesday.

Global miner BHP Billiton fell $1.30 to $32.70.

Rio Tinto was down $5.92, or 10.02 per cent, to $53.18 after it said it would shed 705 jobs as falling commodity prices forced it to slash bauxite production at its Weipa mine and pull back on a refinery expansion project, both in Queensland.

Mr Muller said Rio was down on concerns that its investment deal with China's Chinalco may not be approved may have to undertake a heavily-dilutive rights issue instead.

Aluminium refiner Alumina was dumped 12 cents to $1.495.

Mr Muller said it was being sold off ahead of an expectation that aluminium giant Alcoa Inc would book a loss when it reports quarterly earnings tonight in the United States.

Mineral sands miner Iluka Resources descended 42 cents, or 10.97 per cent, to $3.41 as it announced it would axe 135 jobs in Western Australia after cutting its forecast output this year due to weak demand.

Among the major banks, National Australia Bank was 54 cents lower at $23.06, Westpac dropped 40 cents to $20.30, ANZ surrendered 20 cents to $17.00, and Commonwealth Bank retreated 50 cents to $36.32.

Bendigo and Adelaide Bank backtracked 48 cents to $6.91 on a raft of broker downgrades after Monday's earnings warning from the regional bank.

On Wall Street overnight, Dow Jones Industrial Average index was down 41.74 points, or 0.52 per cent, at 7975.85.

Telco Telstra climbed 14 cents to $3.35 after the door reopened for the company to be involved in the government's proposed national high-speed broadband network.

Optus-owner Singapore Telecommunications added six cents to $2.34.

Retailer Woolworths gained 36 cents to $25.57 and Wesfarmers, which owns Coles, was 15 cents richer at $19.24.

In the media sector, News Corp was down 18 cents to $12.07 and its non-voting stock was 34 cents weaker at $10.61.

Consolidated Media was steady at $2.00 and Fairfax scraped off one cent to $1.125.

Printing and distribution company PMP was steady at 54.5 cents as it appointed chief financial officer Richard Allely as its new chief executive.

In the gold sector, Newmont dipped one cent to $6.00. Newcrest sagged 47 cents to $28.75 and Lihir picked up three cents to $2.94.

The price of gold in Sydney at 1640 AEST was US$876.50 per fine ounce, down five US cents on yesterday's close of US$876.55.

Among other stocks, rural services and automotive components supplier Futuris Corporation was 7.5 cents poorer at 42 cents as it said it was "comfortable" with downgraded analyst expectations for the company's annual underlying profit.

The top-traded stock by volume was Telstra, with 268.18 million shares worth $894.34 million changing hands.

Preliminary national turnover was 1.87 billion shares worth $4.71 billion, with 568 stocks down, 410 up and 273 unchanged.

- AAP