The Australian market fell for the second day running, led downwards by the finance and resource sectors. The S&P-ASX 200 and All Ordinaries indexes fell by 0.8%, closing the day at 4785.6 points and 4816.1 points respectively.
There was more bad news for Europe when Standard and Poor’s downgraded Spain’s sovereign credit risk from AA+ to AA, again plunging the markets into negative territory.
This followed yesterday’s downgrade of both Greece and Portugal.
ANZ Bank senior dealer Alex Sinton told Dow Jones Newswires a bailout of Greece needed to happen soon and that definite action was needed from Germany.
“It’s pretty much do or die this weekend to rescue Greece. The longer they leave it, the more it’s going to cost,” he said.
Reports that Germany has agreed to push through its share of the bailout, provided debt reduction talks with the International Monetary Fund and European Union are successful, may give investors hope for a speedy resolution.
Germany’s DAX 30 index fell 1.2% to 6084.34 points while France’s CAC 40 dropped 1.5% to 3787 points.
In the US things looked brighter, after the Federal Reserve made the decision to again leave interest rates alone.
Despite suggestions that interest rates will need to be raised in order to control inflation as the economy recovers, the Federal Reserve said it intended to keep rates near zero for an “extended period”
On the local scene the resource sector looked dismal. Rio Tinto was once again the biggest loser, shedding $A1.85, or 2.5%, to $72.59, while BHP Billiton lost 57c, or 1.4%, to $40.50.
On the MiningNews.net watchlist the highest earner of the day was OZ Minerals, with an increase of 1c, or 0.84%, to $1.19.
Fortescue Metals fell 11c to $4.73 on news it has lost a court case in the UK and has been ordered to pay shipping contractor Zodiac Maritime damages of around $US78 million ($A84.6 million).
The dispute arose when Fortescue suspended a number of contracts with Zodiac in 2008 due to turmoil in international freight and iron ore markets.
Meanwhile, commodity prices continued to feel the effects of the crisis in Greece, with aluminium the only base metal on the London Metal Exchange to increase overnight, rising 1.9% to $US2156.75 per tonne.
Tin fell the furthest, dropping 3% to $17,930/t, followed by lead, which fell 2.8% to $2209.50/t.
Zinc shed 1.3% to $2296/t, copper dropped 1.2% to $7362/t and nickel fell 1.1% to $25,590/t.
On the other hand, gold performed well today, proving a safe haven for investors scared off from other markets.
Prices for spot and Comex gold both rose, with spot gold trading at around the $1166 per ounce mark while Comex gold increased 0.8% to $1171.80/oz.
On the local gold scene Eldorado Gold once again took out the top spot overall, gaining A36c to $16.05 on no news, while Newcrest Gold shed 61c to $33.62.
Meanwhile, the bunfight over Macarthur Coal took a small step towards resolution late yesterday, with Macarthur’s bid for Middlemount, a Queensland mine it operates as a joint venture with Noble Group, being terminated.
Noble is the majority owner of Gloucester Coal, which has been the target of a takeover bid from Macarthur.
Under the deal, which has been vetoed by Noble’s board, Noble would have received a 24% share in Macarthur in return for its stakes in Gloucester and Middlemount.
Macarthur has extended its offer for Gloucester from May 6 to 13, leaving the door open to further talks.
Macarthur is itself the target of takeover bids from US-based Peabody Energy and New Hope Corporation.
Shares in all three of the ASX-listed companies fell today, Macarthur down 17c at $15.73, Gloucester falling 5c to $12.05 and New Hope closing at $5.02, down 10c.
