AUSTRALIAN CLOSE 3 APRIL 2012

"Australian shares pared gains to end Tuesday slightly higher after the Reserve Bank of Australia dashed hopes for economic rejuvenation by keeping the cash rate on hold.

The benchmark ASX 200 index pared strong early gains driven by better-than-expected manufacturing data from China and strong leads from Wall Street to end the day up 7.7 points, or 0.2%, at 4,337.

The Reserve Bank said that while growth was lower than forecast, it was prudent to wait for further inflation data before considering a rate cut.

Credit Suisse sales trader Richard Post said the Reserve Bank's decision to keep the cash rate on hold at 4.25% was likely to keep pressure on retail and construction stocks for the next month, despite hints the central bank is expected to cut rates in May.

Myer closed the day down 1.8% at A$2.23 while JB Hi Fi extended this week's losing streak to close 1% lower at almost a month-low of A$10.50. Property trusts also shed 0.3% as investors feared the rate cut could further dampen demand for residential and retail property.

Metcash shares slumped 4.5% to A$4.10 after the grocery wholesaler said it will book charges and asset writedowns of between A$109 million and A$133 million as part of a broad restructuring to the group's business.

Industrial stocks were also among the day's losers, shedding 0.3% after data showing Australia's manufacturing sector contracted in March added to fears the strong Australian dollar is hurting the sector.

But the exchange's heftiest stocks--resources and the banks--kept the market afloat with small gains driven by rising commodity prices overnight and healthy manufacturing data out of the world's two largest economies, the US and China.

Rio Tinto ended the day up 0.9% at A$66.79 and BHP Billiton closed 0.2% higher at A$35.18 after Flinders Mines Ltd. (FMS.AU) said Tuesday its A$554 million takeover by Magnitogorsk Iron & Steel Works (MAGN.RS) has been delayed indefinitely, easing concerns of competition in the west Pilbara mining region.

Telstra, traditionally seen as a defensive stock, posted a 1.8% gain to close at A$3.33 as investors flocked to the high-yielding stock.

Dealers will now be looking for cues from the latest minutes from the U.S.'s Federal Open Market Committee to set the tone for what to expect from the world's largest economy, said IG Markets market strategist Stan Shamu. A sharp rally in U.S. stocks has been a key driver of gains on the ASX this year.

Australia trade balance data due out Wednesday will also be closely watched. "



Source: Dow Jones Newswires.


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