3:00AM New York, 7:00PM Sydney - ASX 200 index lost 3.1% after miners declined on a weak precious metal prices.

Market Sentiments

ASX 200 index lost 3.1% or 161.6 to close at 5,127.50.

The preliminary market turnover was 2.35 billion shares worth $13.84 billion with 351 stocks closing up, 773 closing down and 300 unchanged. The most active was Telstra, with 77.25 million shares worth $328.1 million.

Market Driver

Australia''s second-largest locally-traded metals miner, Lihir Gold Ltd agreed to merge with Equigold NL to create a global gold mining leader with a diversified portfolio of operations.

Equigold shareholders will receive 33 Lihir shares for every 25 Equigold shares.

Based on the closing prices of Lihir shares a day before the deal announcement, Equigold stock was valued at $5.33 in the offering.

The combined group will have assets in Australia, West Africa and Papua New Guinea, producing in excess of 1.2 million ounces of gold a year from 2009 at a cash cost in the lowest quartile of global producers.

The market capitalization of the combined group will be approximately A$9 billion and will be in top 30 companies in Australia and among the world''s largest gold producers.

Following the merger, Lihir would have approximately 25 million ounces in reserves and operations at Lihir Island in PNG, Ballarat in Victoria, Mt Rawdon in Queensland and at Bonikro in Ivory Coast, Africa.

LGL Chairman Ross Garnaut said the merger would lead to the creation of an exciting new global gold major. ""The new entity will be well placed to take advantage of on-going strength in the gold price to deliver increased returns to shareholders. We will have a robust balance sheet, virtually no hedging and an excellent growth profile,"" he said.

The proposed merger is subject to a number of conditions including the approval of Equigold shareholders, regulators and the Federal Court.

The transaction is expected to be completed by early June 2008. Equigold stock rose 7.7% while Lihir stock fell 11%.

Gainers and losers

Of the ASX 200 index stocks, City Pacific Ltd led the gainers with a rise of 20.8% followed by increases in Corp Express Australia of 12%, in Boom Logistics of 6.5%, in Transfield Services of 6.4%, and in QBE Insurance of 6%.

Of the ASX 200 index stocks, AED Oil Ltd led the decliners with a fall of 16.3% followed by losses in Centennial Coal of 15.8%, in Lynas Corp Ltd of 15.1%, in Sundance Resource of 14.6% and in ABC Learning of 14.5%.

Newcrest Mining drops the most on a decline in metal prices

Asia''s largest gold producer by market value, Newcrest Mining Ltd''s share fell 13.1% today marking its worst decline in more than five years a sharp pull back in gold prices. Gold fell to its lowest in a month, leading a drop in commodity prices, after the dollar rallied and continued worries on the demand outlook as the U.S. economy continues to deteriorate.

Gold bullion plunged 11% from a record on March 17 after the Federal Reserve cut its overnight-lending rate less than traders forecast.