16/10/2008 - 13:44

Resource index plunges 12%

16/10/2008 - 13:44

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Western Australia miners have been hit hard in trade today with the metals and mining index plummeting over 12 per cent on fears that the meltdown will spark a global slump and reduce demand for commodities.

Resource index plunges 12%

Western Australia miners have been hit hard in trade today with the metals and mining index plummeting over 12 per cent on fears that the meltdown will spark a global slump and reduce demand for commodities.

The index dropped 419.1 points or 12.58 per cent to 2912.2 points, the biggest percentage drop compared to other indices.

The plunge follows comments made by Rio Tinto chief executive Tom Albanese yesterday that there had been a marked reduction in Chinese commodity demand.

Shares in Rio fell 14.5 per cent to close at $67.10, after dropping to an intraday low of $66.66. The share price of its bidder, BHP Billiton, dropped 12.9 per cent to $25.87.

The metals plunge also follows drops in commodity prices in London overnight, with bellwether metal copper falling 7.2 per cent to $US4920 per tonne for three month deliver.

The price of nickel also lost 7 per cent to $US11,900/t, zinc dropped 6.7 per cent to $US1315/t and lead fell 7.6 per cent to $1515/t.

Analysts are tipping that growth in China will pull back from some 10 per cent this year to around 6 or 7 per cent next year.

Shares in Fortescue Metals Group Ltd dropped 10 per cent to $3.10 after falling as low at $2.80.

The Mid West iron ore miners were also hammered with Murchison Metals Ltd losing nearly 12 per cent to close at 70c and Mount Gibson Iron Ltd plunging 19.4 per cent to 54c.

Portman Ltd was spared somewhat with its share price closing down 0.42 per cent at $21.30, propped up by Cleveland Cliffs takeover which has passed the 90 per cent compulsory threshold.

Shares in another iron ore miner, Territory Resources Ltd, also plummeted, losing 19.05 per cent to 25.5c.

Gold miner Avoca Resources Ltd was not spared even though the spot price of gold was up 1.7 per cent in London at $US847 per ounce. Shares in the stock dropped 6.3 per cent to $1.79.

Uranium miner Paladin Energy Ltd fell 12.7 per cent to $1.93 despite its robust outlook on its future in the yellowcake sector.

WA energy stocks also suffered with Woodside Petroleum down 5.5 per cent to $37, Cooper Energy Ltd lost 10.3 per cent to 26c and its takeover target Incremental Petroleum Ltd down 5.9 per cent to 79.5c.

The local energy index shed 9 per cent to close at 11,478.9 points, while the price of light sweet crude oil in New York dropped to $US73.20 a barrel, 50 per cent off its record highs reached in July.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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