Australian stocks rose, extending a record high. Rio Tinto Group led gains among miners after prices of metals including copper and nickel advanced and after Citigroup Inc. said BHP Billiton Ltd. could afford a $100 billion takeover bid for its smaller rival.
``Mining companies will eventually get re-rated by the market if metals prices manage to stay close to these levels because it will demonstrate that their earnings are more sustainable than the market has been giving them credit for,'' said Adnan Kucukalic, a Sydney-based strategist at Credit Suisse Group.
The S&P/ASX 200 Index added 30.80, or 0.5 percent, to 6335.70 at the close in Sydney. About the same number of stocks rose as fell.
Rio Tinto, the world's third-largest mining company, surged A$4.53, or 5.2 percent, to a record A$91.38. BHP, the biggest, gained 96 cents, or 3.1 percent, to A$31.56.
A measure of six metals traded on the London Metal Exchange, including copper and zinc, climbed 2.1 percent on May 4. Copper rose 0.8 percent, while Nickel jumped 3.6 percent to a record high.
BHP would be able to pay off the debt needed to take over Rio Tinto in five to six years, Citigroup analyst Clarke Wilkins said in a May 4 note. The Melbourne-based company could cut $500 million in costs by buying London-based Rio Tinto and combining their Australian iron ore and coal mines.
A five-year rally in commodity prices spurred more than $123 billion acquisitions last year in the mining industry. Prices could stay high for years, prompting buyout firms to consider bids for mining companies, Merrill Lynch & Co. said last week.
The S&P/ASX 200 Index's futures contract for June added 0.2 percent to 63358. The broader All Ordinaries Index gained 0.5 percent to 6303.50.
The following shares also rose or fell. The stock symbols are in brackets after the company names.
Alinta Ltd. (AAN AU), Australia's biggest energy transmission company, rose 10 cents, or 0.7 percent, to A$15.25. Macquarie Bank Ltd., Australia's largest securities firm, made a new takeover bid to trump an agreed A$7.4 billion ($6.1 billion) bid by Babcock & Brown Ltd. and Singapore Power Ltd. The proposal from Macquarie is ``confidential and conditional'' and Alinta is seeking further information on the terms, Alinta said.
Incitec Pivot Ltd. (IPL AU), Australia's largest fertilizer maker, surged A$2.63, or 5 percent, to A$55.38. The company said first-half profit jumped more than fivefold to A$57.2 million ($47 million) from A$10.1 million a year earlier. Incitec's full-year earnings will be boosted by 12 months contribution from its recently acquired Southern Cross Fertilizers Pty. and the 60 percent increase in ammonia-based fertilizer prices this year. The company expects cost savings this year to be more than double its original estimate.
Fairfax Media Ltd. (FXJ AU), which owns the Sydney Morning Herald, slipped 14 cents, or 2.7 percent, to A$5.13. Rupert Murdoch's News Corp. sold its shares in Fairfax, six months after buying the stake to thwart any attempt to take over its nearest Australian rival. News Corp. sold its 7.5 percent stake for A$5.07 a share, Fairfax said.
Fortescue Metals Group Ltd. (FMG AU), a mining company that is building an iron-ore mine and port in Western Australia state, jumped A$1.89, or 7.9 percent, to A$25.93. The stock gained for a second day after it was included in Morgan Stanley Capital International Barra's stock indexes with effect from May 31. More than $3 trillion in funds are benchmarked worldwide to MSCI's measures.
Healthzone Ltd. (HZL AU), which produces health and beauty products, soared 9 cents, or 26 percent, to 43 cents. The company said it agreed to buy a healthfood store in Sydney for A$315,000 plus shares.
Qantas Airways Ltd. (QAN AU), Australia's biggest airline, was halted from trading. Macquarie Bank Ltd. and its partners said they're considering a new offer for Qantas after applications to include a late acceptance for the current bid were rejected. The group may make a new cash bid at the same price of A$5.45-a-share, the bank said in a statement. Allco Finance Group Ltd. (AFG AU), a partner in the bid, dropped 55 cents, or 4.4 percent, to A$12.05.
Rinker Group Ltd. (RIN AU), the biggest supplier of cement blocks in the U.S., added 34 cents, or 1.8 percent, to A$19.23. Perpetual Ltd., the largest shareholder of Rinker, will accept Mexico-based Cemex SA's $14.2 billion takeover bid for the Australian building materials maker, removing a potential hurdle to the deal. Perpetual holds a 10.5 percent stake in Rinker.
Source : www.bloomberg.com
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