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Australia stocks up 1.5 pct; Rio Tinto firms
Tuesday June 30, 01:38 PM
(Adds comment and detail)
SYDNEY, June 30 (Reuters) - Australian shares rose to two-week highs on Tuesday, led by mining heavyweights BHP Billiton and Rio Tinto as talk of strong demand for Rio's $15.2 billion rights issue buoyed demand for resource stocks.
The benchmark S&P/ASX 200 .AXJO was up 58.6 points at 3,945.5 points by 0120 GMT. New Zealand's benchmark NZX 50 index .NZ50 was little changed, up just 1.5 points at 2,776.6
Speculation swirled on Tuesday that China's state-owned Chinalco, which launched a failed bid to raise its stake in Rio earlier this year, is set to take up its full entitlement to new shares in Rio's $15.2 billion rights issue. [ID:nSYD508826]
"It's a positive sign. If Chinalco still feels Rio is a very good investment, then it is underpinning the industry," said Ben Potter, a research analyst at IG Markets.
Rio (ASX: RIO.ax) was up 3.5 percent at A$52.01, while BHP (ASX: BHP.ax) rose 1.9 percent to A$34.53.
Potter said Tuesday's deadline for key price talks over iron ore contracts between the miners and their China customers were supporting Rio and BHP as well.
Rio, the world's No. 2 iron ore miner, said on Monday it was still in talks with Chinese steel mills over iron ore prices, although many analysts said the miners and the Chinese firms appear too far apart in talks to strike a deal now. [ID:nSYD517492]
Potter said miners are likely to benefit if Tuesday's deadline is not met because it means China's steel mills would have to buy iron ore in the spot market, where prices are likely to be higher than any would-be contract price. Spot prices are now trading at $12-$15 a tonne over benchmark prices already set separately by the miners with Japanese and South Korean steel mills.
STOCKS ON THE MOVE
* Department store retailer David Jones Ltd (ASX: DJS.ax) jumped 10.6 percent to a near 17-month high of A$4.59 after it raised its full-year profit forecast on a strong trading performance in May and June. [ID:SYD509690]
0113 GMT
* David Jones' profit upgrade lifted demand for other retail stocks. Electricals and furniture retailer Harvey Norman (ASX: HVN.ax) jumped 8.9 percent to A$3.31. Electrical goods retailer JB Hi Fi (ASX: JBH.ax) rose 1.7 percent to A$15.32.
0113 GMT
* Miner PanAust Ltd (ASX: PNA.ax) jumped 4.4 percent to A$0.355 after it said it had resumed normal operations at its copper-gold mine in Laos.
0042 GMT
* Telecom Corp of New Zealand Ltd (NZX: TEL.nz) fell 1.5 percent to NZ$2.70 after the competition watchdog said it planned to recommend price controls on making calls to mobile phones, and would also look at whether controls should be imposed on calls between competing mobile networks. [WLF001377]
0134 GMT
* New Zealand children's clothing retailer Pumpkin Patch Ltd (NZX: PPL.nz) gained 7.4 percent to NZ$1.45. It said it would shut 20 out of its 35 shops in the United States because of tough conditions, but added that debt levels were at the low end of expectations, stocks levels under control, and trading in other parts of the group robust. See [WLF001376] ($1=A$1.25) (Reporting by Koh Gui Qing)
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