Australian stocks: Shares end up, US hopes offset AMP dive

SYDNEY - The Australian share market closed up slightly on Monday as gains for News Corp, Qantas Airways and the major banks offset AMP's 36 per cent slump to a record low.

The benchmark S&P/ASX 200 index .AXJO rose two points, or 0.1 per cent, to 2,977.4 after a firm lead from Wall Street buoyed many globally exposed stocks.

On the broader market, there were 570 gainers and 429 losers while 345 stocks held steady. Volume totalled A$2.2 billion ($1.4 billion), compared with A$2 billion on Friday.

"If you look down the top 100 stocks there's a very mixed bag," said Scott Marshall, an analyst at Shaw Stockbroking. "It looks like the market as a whole maintains its defensive stance."

Australia's biggest life insurer and fund manager AMP, the most actively traded stock, fell A$3.13 to A$5.60, but bounced off an all-time low at A$5.40, after last week's trading halt was lifted, taking about 20 points off the benchmark.

A share sale completed on Friday saw big investors spend A$1.2 billion on new AMP shares, discounted to A$5.50 a share compared with Wednesday's close at A$8.73, as AMP launched a shock revamp that will see its loss-making British operations quarantined into a separately listed company.

Some fund managers warned the plan may not be the end of bad news for investors, while others took heart from the fact that AMP's woes had not tainted the general insurance sector as Royal & Sun Alliance Plc's RSA.L local offshoot, Promina, prepares for its debut on the Australian Stock Exchange on May 12.

Suncorp Metway SUN.AX rose 1.4 per cent to A$11.05, market leader Insurance Australia Group IAG.AX added 0.7 per cent to A$3.00 and QBE Insurance QBE.AX rose one per cent to A$8.45 as fundamentals continue to favour their sector.

BIG PICTURE BRIGHTENS

Media giant News Corp NCP.AX rallied 3.3 per cent to A$11.49, buoyed by a strong US session on hopes for an eventual economic recovery.

"All of the factors which should support markets moving forward are certainly in place," said Lindsay Gibson, fund manager at Credit Suisse First Boston.

"They have been in place but sentiment has always been on the negative side, given the Iraq hostilities, given SARS more recently, given the economic slowdown and non-trust in corporate management," he said.

Qantas Airways QAN.AX rose 2.5 per cent to A$3.25 as it pursues a planned alliance with Air New Zealand AIZ.AX and told local media it would maintain dividend payouts despite a drop in demand caused by fears about the deadly flu-like SARS virus.

Stronger banks also gave the overall market some backbone. CBA CBA.AX rose 2.1 per cent to A$27.41 and NAB NAB.AX rose 0.7 per cent to A$32.05. The fifth-largest bank St George SGB.AX added just two cents to A$19.87 ahead of its first-half result due on Tuesday.

Orica ORI.AX, the world's largest explosives maker, gained 2.5 per cent to A$9.99 after it posted a 21 per cent rise in first-half profit before one-off items, fuelled by strong demand for paints and explosives in Australia and Asia, and its Fernz chemicals purchase.

"The positive factor is that cost-cutting has been a feature of this result. They're holding on to the benefits of those cost cuts and not necessarily giving them away to customers," said Deutsche Asset Management analyst Darko Kuzmanovic.

Building materials group Bristile BRS.AX rose 2.4 per cent to A$3.40 after lifting its year profit forecast by 12 per cent.

At the smaller end of the market, renewable energy company Geodynamics GDY.AX fell 5.3 per cent to A$0.54 after it issued 3.8 million shares at A$0.50 to fund an onshore well.

($=A$1.59)