Goldman Lowers Target for Australia's Benchmark Index

By Shani Raja

July 24 (Bloomberg) -- Goldman Sachs Group Inc. lowered its forecast for Australia's benchmark stock index by about 6 percent as a slowing global economy crimps demand for resources.

The S&P/ASX 200 Index will finish the year around 5,600, compared with an earlier estimate of 5,925, Melbourne-based Goldman analysts led by Chris Pidcock said in a strategy note published today. The lowered forecast reflects a higher risk premium for resources and industrial stocks, they said.

``Resources are at risk of underperforming in the short term on sentiment shifts around a slowing global economy and the potential impact on China,'' the strategists wrote. ``Resources will struggle over the next three months.''

The World Bank said last month that global economic growth will probably slow to 2.7 percent this year from 3.7 percent in 2007, amid spiraling food and fuel costs and mounting losses tied to credit-market investments. A measure of material stocks on the benchmark has dropped 21 percent from a record on May 19.

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