Australia Stocks Fall, Posting Biggest Weekly Drop in 6 Months

By Ian C. Sayson

Sept. 5 (Bloomberg) -- Australia's stocks fell for the fifth day, sending the benchmark index to its biggest weekly loss in six months, on concerns that the global economic slowdown is worsening.

National Australia Bank Ltd. sank 4.3 percent after Bill Gross, manager of the world's biggest bond fund, warned of more financial turmoil. Westfield Group, the world's biggest shopping center owner by market value, fell 2.3 percent after U.S. jobless claims rose to the highest in almost five years. Fortescue Metals Group Ltd. dropped 7.3 percent after raw-materials prices declined.

``The bearish sentiment is dictated a lot by what's happening in the U.S.,'' said Peter Vann, who helps manage $1.6 billion at Constellation Capital Management in Sydney. ``We have been underweight in commodities because we think they're overpriced.''

The S&P/ASX 200 Index slipped 102.40, or 2.1 percent, to 4,877.10 at the close in Sydney, completing a five-day, 5 percent slump. That's the measure's biggest weekly loss since March 7. The S&P/ASX 200 Index futures contract due in September plunged 2.5 percent to 4,874 while the All Ordinaries Index declined 101.40, or 2 percent, to 4,949.50.

National Australia Bank, the nation's largest by assets, dropped 4.3 percent to A$23.60. Commonwealth Bank of Australia, the biggest provider of home loans, fell 3.1 percent to A$41.59. The stocks were the two biggest drags on the benchmark index today.

U.S. Decline

The U.S. government should start using more of its money to support markets to avert a ``financial tsunami,'' Gross, co-chief investment officer of Pacific Investment Management Co., said yesterday.

Westfield sank 2.3 percent to A$17.25, the most in seven days. James Hardie Industries NV, the biggest seller of home siding in the U.S., fell 1.8 percent to $4.91.

The number of Americans remaining on unemployment rolls rose in the week ended Aug. 23 to a five-year high, the Labor Department said yesterday. Separately, European central bank President Jean-Claude Trichet said yesterday the economy is undergoing an ``episode of weak activity.''

Fortescue dropped 7.3 percent to A$6.39 as a measure of six metals traded on the London Metal Exchange dropped 1.1 percent. Rio Tinto Group, the world's No. 2 mining company, slid 1.4 percent to A$110.08, a seven-month low.

The following shares were among the most active in Australian trading. Stocks symbols are in brackets after company names.

Indophil Resources NL (IRN AU), an explorer of gold and copper resources in the Philippines, tumbled 42.5 cents, or 36 percent, to 76.5 Australian cents, the steepest drop on record. Xstrata Plc agreed to increase its stake in the company to 19.99 percent and said it has ``no current intention'' of buying further. Indophil was the biggest loser in the All Ordinaries Index.

Incitec Pivot Ltd. (IPL AU), Australia's largest fertilizer maker, decreased A$7.88, or 5.6 percent, to A$133.12. The company won approval from shareholders for a 20-for-1 stock split, Neville Heydon, spokesman for the Melbourne-based company said today.

Linc Energy Ltd. (LNC AU), owner of coal-mining licenses in Australia's Queensland state, jumped A$1.30, or 43 percent, to A$4.35, the most since May 2006. The company said today it agreed to sell its Teresa coal exploration permits to China's Xinwen Mining Group Ltd. for A$1.5 billion ($1.2 billion).

Perilya Ltd. (PEM AU), an exploration and mining company, decreased 3 cents, or 6.9 percent, to 40.5 Australian cents, the lowest since Aug. 6. The stock was downgraded to ``sell'' from ``neutral'' by UBS AG, which also reduced its price target to 34 cents from A$1.85.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net