Australian share prices closed 1.2 percent lower on Monday as major banks and mining giant BHP Billiton led the market lower following negative leads and falls on Wall Street. The benchmark S&P-ASX 200 was 43.3 points down at 3,497.4, while the broader All Ordinaries shed 34.6 points, or 0.99 percent, to 3,443.50.
Investors were sidelined ahead of Tuesday's scheduled decision by the Reserve Bank of Australia on whether to further reduce interest rates, leaving only negative news to push the index lower. "There's some general weakness throughout the banks but nothing too drastic," said ABN Amro Morgans private client adviser Peter Knight
"Obviously all the leads we had on Friday were a bit negative, and BHP's down too, so that's what's doing the damage," he said, referring to Friday's fall on the US market. A further negative lead came when Prime Minister Kevin Rudd announced the global economic crisis and China's slowdown would slash 115 billion Australian dollars (75 billion US) from the country's budget over the next four years.
Preliminary turnover Monday stood at 917.8 million shares worth 2.56 billion Australian dollars (1.61 billion US), with 325 issues up, 504 down and 265 unchanged. BHP's mining rival Rio Tinto helped prop up the market after it confirmed it is in talks with major shareholder Chinalco about a capital injection and asset sales as the company works to reduce its debt.
Rio Tinto rose 5.46 percent to 44.45 dollars after it confirmed speculation it was talking to the Chinese firm, while BHP Billiton lost 1.64 percent to 30.00. Fortescue Metals surged by 10.17 percent to 1.95, while oil and gas producer Woodside Petroleum eased by 0.08 percent to 35.35 and Santos retreated 1.25 percent to 14.19.
In the banking sector, National Australia Bank lost 1.16 percent to 18.71, Westpac dropped 2.11 percent to 15.31, Commonwealth Bank shed 1.67 percent to 26.45, and ANZ Banking Corp scraped off 0.08 percent to 13.26.