Australia's S&P/ASX Slumps to 2 1/2 Year Low on Bank Concerns

By Shani Raja

July 15 (Bloomberg) -- Australia's S&P/ASX 200 Index fell to its lowest in almost 2 1/2 years on concern bank losses will widen after the collapse of U.S. lender IndyMac Bancorp Inc.

National Australia Bank Ltd., which last week said it may have to increase provisions for $1.1 billion of debt investments, tumbled to its lowest since September 2001, while Australia & New Zealand Banking Group Ltd. fell to its lowest since Dec. 2003. U.S. financial shares yesterday slumped to their lowest level in almost a decade.

Australia's benchmark index lost 107.60, or 2.2 percent, to 4,813.40, its lowest since Feb. 17, 2006, at 2:25 p.m. in Sydney, extending its loss this month to 7.7 percent. The S&P/ASX 200 has tumbled 29 percent since its record on Nov. 1, 2007, as banks pay more for credit in the wake of the U.S. subprime rout.

In the U.S., the Standard & Poor's 500 Financials Index tumbled 5 percent after the collapse of IndyMac spurred speculation regional banks are short of capital. The S&P 500 slid 0.9 percent to 1,228.3.

The following companies were among the biggest losers and gainers on the Australian stock exchange.

Gold producers: Sino Gold Mining Ltd. (SGX AU), owner of China's second-largest gold mine, advanced 38 cents, or 7.6 percent, to A$5.41, the index's third-biggest gainer. Newcrest Mining Ltd. (NCM AU), owner of Australia's largest, rose 43 cents, or 1.3 percent, to A$32.90, the highest since June 3.

Gold rose to the highest in more than three months on heightened speculation the U.S. or Israel is preparing to attack Iran, boosting demand for the metal as a haven.

Alchemy Resources Ltd. (ALY AU), an Australian gold explorer, soared 3 cents, or 20 percent, to 18 cents, the highest since Dec. 17, 2007. The company said it discovered high-grade hematite iron ore at the recently acquired Three Rivers Gold Project in Western Australia.

Allco Finance Group Ltd. (AFG AU), the Australian asset manager that's lost more than 90 percent of its value this year, rallied 6 cents, or 16 percent, to 44 cents, the biggest gainer on the index. The company said it will cut senior debt to A$400 million ($389 million) by June 2009 after refinancing loans with bankers.

Centro Properties Group (CNP AU), the shopping mall owner facing a deadline to repay as much as A$6.6 billion ($6.3 billion) of debt, was the benchmark's second-biggest gainer. Its shares rose 4 cents, or 15 percent, to 27 cents, the most since April 3, after raising $714 million selling a stake in its unlisted Centro America Fund.

CP1 Ltd. (CPK AU), an Australian property developer, fell 2 cents, or 17 percent, to a record low 10 cents. The company placed four of its Victoria waterfront developments on the market, the Australian Financial Review reported today, citing sales agent Colliers International.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.