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Market Update

Australia Holds Rate for the 7th Time, BHP to Spin-off $20 B of Assets

Author: Marcus Jacob
Last Update: 10:02 AM ET April 01 2014

5:00 PM Sydney – Stocks in Sydney pared most of the 1% loss at the opening after two manufacturing reports indicated mixed picture of manufacturing sector in China. Reserve Bank of Australia held benchmark interest rate for the seventh time in a row and noted a solid expansion in the housing market.

Stocks in Sydney opened 1% lower and struggled to advance in morning trading but market indexes staged a recovery after the release of two better than expected manufacturing reports in China.

Market sentiment was swayed after the Reserve Bank held interest rate and central bank said that the recent data suggest a slightly firmer demand from consumer and “solid expansion in housing construction.”

In the statement, the central bank also focused on the health of the financial markets and said local equity and debt markets are “well placed for providing adequate funding.”

The Reserve Bank of Australia decided to keep Australia’s official cash rate at record low of 2.5%. The interest rates were held for the seventh time in a row.

The official report from China showed purchasing managers index was 50.3 in March, suggesting a slight expansion in the manufacturing sector. The news lifted market indexes.

However, a private survey conducted by HSBC showed the index declined to 48 in March. The final reading was lower than 48.1 reported in the previous estimate. Any reading below 50 suggests a contraction.

Australian dollar closed at 92.65 U.S. cents but traded as high as 93 cents. Stock market trading turnover increased to 723 million shares worth $3.9 billion.

The ASX 200 index slid 5.60 to 5,389.20 and the broader All Ordinaries fell 8.10 to 5,394.90.

Stocks in Review

Rio Tinto rose 30 cents to $63.85.

BHP gained 58 cents to $37.05 and the mining giant issued a statement and said it intends to spin off its non-core assets including aluminum, nickel and bauxite assets in a separate company worth $20 billion to shareholders.

The company also stressed in the statement that it plans to focus on four segments including copper, coal, iron ore and petroleum resources to “improve productive performance of largest businesses.” The company is likely to increase its focus on potash assets.

Woodside Petroleum Limited dropped 42 cents to $38.60.

Westpac Banking Corp added 3 cents to $34.59.

Lynas Corporation Limited closed unchanged at 21 cents after the rare earth minerals producer said shipments in the March quarter surged 84% to 751 tons of rare earth oxides with average selling price increased 5%.

The company said production in the quarter of rare earths jumped 47% to a new record of 1,089 tons.

Prana Biotechnology Limited tumbled 73.5% to 27.5 cents after the therapeutic drugs developer said its Phase II Imaging trial failed to reduce the symptoms of Alzheimer''s disease at its primary stage.

Southern Cross Electrical Engineer Ltd plunged 22.9% to 57 cents after the company estimated its full year net profit to fall in the range of $7 million to $10 million from $17.3 million a year ago.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc