Australia Stocks Rise, Paring Worst Monthly Loss Since 1987

By Ian C. Sayson

Oct. 31 (Bloomberg) -- Australian stocks rose, paring the biggest monthly loss since 1987, on speculation global interest- rate cuts will spark demand and an economic slowdown in the U.S. will be mild.

Westfield Group, the world's biggest shopping mall owner by market value, climbed 10 percent after the U.S. said its economy shrank a less-than-estimated 0.3 percent last quarter. CSL Ltd., a drugmaker that makes 37 percent of its sales in the Americas, gained 2.7 percent.

The S&P/ASX 200 Index rose 16.90, or 0.4 percent, to 4,018 at the close in Sydney, while the broader All Ordinaries Index added 25.40, or 0.6 percent, to 3,982.70. The S&P/ASX 200 completed a 13 percent loss this month, its worst since the measure started in 1992, while the All Ordinaries posted a 15 percent slump, the most since October 1987.

``There has been some wishful thinking that a U.S. recession will be stopped from happening,'' said Hans Kunnen, head of investment market research at Colonial First State Global Management, which manages $128 billion. ``Australia will slow down but the view of most is it will not go into a recession.''

Westfield, which has 59 malls in 13 U.S. states including California, gained 10 percent to A$16.40, its most since Oct. 13. CSL rose 2.7 percent to A$36.40.

The decrease in U.S. gross domestic product in the July-to- September period was less than the 0.5 percent forecast by economists in a Bloomberg survey. Separately, the Bank of Japan today cut its benchmark interest rate to 0.3 percent to help stave off a prolonged recession in the world's No. 2 economy. That followed rate cuts in the U.S., China and Taiwan.

The S&P/ASX 200 was down for most of the day, dragged by BHP Billiton Ltd. and Woodside Petroleum Ltd. on lower prices for metals and oil.

BHP, the world's biggest miner, snapped a four-day rally, losing 2.1 percent to A$27.99. Woodside, Australia's second- biggest oil producer, dropped 3 percent to A$41.88.

A measure of six metals traded on the London Metal Exchange slumped 7.8 percent yesterday, its biggest loss since Oct. 13, 2004, while crude oil for December delivery dropped 2.3 percent to $65.96 a barrel. The oil contract was 2.3 percent lower in after-hours trading.

OZ Minerals Ltd., the world's second-biggest zinc mining company, fell 8.7 percent to 94.5 Australian cents, its first loss in four days. Santos Ltd., Australia's third-biggest oil producer, decreased 3.3 percent to A$13.49, its biggest loss since Oct. 23.

The following is a list of companies whose shares were among the most active in Australian trading. Stocks symbols are in parentheses after company names.

Iron ore producers: Fortescue Metals Group (FMG AU), Australia's third-largest iron ore producer, decreased 19 cents, or 6.1 percent, to A$2.95, its biggest loss since Oct. 23. Murchison Metals Ltd. (MMX AU), an Australian iron ore producer partly owned by U.S. hedge fund Harbinger Capital Partners, fell 15 cents, or 17 percent, to 76 Australian cents, its biggest loss since Oct. 10.

Iron ore prices may be cut by 10 percent to 20 percent at formal negotiations, which begin next month, the Financial Times reported, citing traders and bankers who attended a conference in Quingdao, China. Separately, Murchison said its share price, which surged 56 percent yesterday, may have been boosted by prospects of government funding for its port and rail project.

Property and building materials: Stockland (SGP AU), the nation's largest housing developer, declined 15 cents, or 3.8 percent, to A$3.85, its lowest since Nov. 30, 2000. Boral Ltd. (BLD AU), Australia's biggest seller of building materials, fell 8 centavos, or 1.7 percent, to A$4.60, extending this month's loss to 25 percent. Dexus Property Group (DXS AU), which invests in properties in Australia, New Zealand and the U.S., decreased 10 cents, or 12 percent, to 74.5 Australian cents.

Australia's sales of newly-built homes fell at faster pace, sliding 1.8 percent in September from a month ago, the Housing Industry Association said.

Australian Pharmaceutical Industries Ltd. (API PM), the nation's biggest drug wholesaler, increased 2.5 cents, or 4.7 percent, to 56 Australian cents, its largest gain this week. The stock was raised to ``neutral'' from ``sell'' at UBS AG.

City Pacific Ltd. (CIY AU), an Australian funds manager and property investor, surged 3.9 cents, or 43 percent, to 13 Australian cents, the most since March 12. The company and its First Mortgage Fund won extension for A$235.5 million of debt, City said.

Felix Resources Ltd. (FLX AU), an Australian coal producer, climbed A$1.20, or 11 percent, to A$11.86, its highest since Oct. 7. Talks with potential buyers of the company are still ongoing, Managing Director Brian Flannery said during the coal miner's annual stockholders' meeting.

GWA International Ltd. (GWT AU), an Australian maker of furniture, bathroom fixtures and housewares, sank 27 cents, or 10 percent, to A$2.38, its biggest loss since Oct. 27, 2005. The stock was cut to ``sell'' from ``hold'' by ABN Amro Bank NV.

Straits Resources Ltd. (SRL AU), an Australian copper, gold and coal mining company, jumped 10 cents, or 8.5 percent, to A$1.28, completing a 28 percent gain this week. The company is reviewing all its operations and curbing expansions and exploration in a bid to conserve cash as a slump in metals prices erodes margins, Chief Executive Milan Jerkovic said.

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