Australia's S&P/ASX 200 Drops, Extending 3-year Low; Banks Fall

By Shani Raja

Oct. 8 (Bloomberg) -- Australia's benchmark stock index fell, extending a 3-year low, as banks and resources companies tumbled on concern the deepening credit crisis will further slow global economic growth.

National Australia Bank Ltd., the nation's largest lender, dropped 6.6 percent, leading declines among financial companies. BHP Billiton Ltd. slumped 5.8 percent on fears worldwide demand for raw materials will weaken. Woodside Petroleum Ltd. dropped to the lowest in almost eight months.

``People have woken up to the fact this isn't purely a financial issue,'' said Angus Gluskie, who helps oversee $500 million at White Funds Management in Sydney. ``It's one that's impacting significantly on the underlying economy. We're probably looking at 12 to 18 months of global growth slowing.''

The S&P/ASX 200 Index fell 4.2 percent to 4,426.20 at 11:30 a.m. in Sydney, the lowest since Oct. 28, 2005, wiping out yesterday's 1.7 percent gain. The index has lost almost a third of its value this year amid a credit freeze sparked by the U.S. subprime mortgage crisis.

The U.S. Standard & Poor's 500 Index dropped 5.7 percent to below 1,000 for the first time since 2003 yesterday on concern banks and real-estate companies are running short of money.

Babcock & Brown Ltd., a manager of infrastructure assets, slumped 19 percent to A$1.05, its fifth straight loss. BlueScope Steel Ltd., Australia's largest steelmaker, fell 4.3 percent to a two-year-low A$6.46. James Hardie Industries NV, the biggest seller of home siding in the U.S., dropped 2.5 percent to A$4.88, the lowest since Sept. 18.

Alumina Ltd. plunged 12 percent to A$2.61, the lowest in more than nine years, after profit at its venture partner Alcoa Inc. more than halved as aluminum demand slumped.

Alternative Asset

Sino Gold Mining Ltd. was among the winners today. The stock jumped 2 percent to A$4.66 after gold futures rose 1.8 percent to $882 an ounce in New York on speculation central banks around the world will cut borrowing costs, boosting demand for the metal as an alternative asset. Sino and Lihir Gold Ltd. were among the index's five best performers.

The S&P/ASX 200 Index yesterday recovered losses to end the day higher after Australia's central bank cut its benchmark interest rate by one percentage point, the most since a recession in 1992. The nation's biggest banks, led by Commonwealth Bank of Australia and Westpac Banking Corp., followed suit by cutting their standard variable home loan rates by 80 basis points.

National Australia today fell 6.6 percent to A$24.29, the most since July 25. BHP dropped 5.8 percent to A$29.87, while Woodside declined 4.1 percent to A$45.14.

The following were among stocks that rose of fell today on the Australian stock exchange.

Nexus Energy Ltd. (NXS AU), developer of the proposed $1.2 billion Crux natural gas liquids project off Australia's north, tumbled 22 cents, or 20 percent, to 87 cents, the most in a year, after the $255 million sale of a stake in the venture collapsed.

Stockland (SGP AU), Australia's largest housing developer, dived 49 cents, or 8.6 percent, to A$5.21, the lowest since Sept. 15. The company said it raised A$300 million in a placement of 56.6 million shares to institutional investors, and that it's planning a retail offer.

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