Resource stocks shake up indices

WESTERN Australian resource stocks have made a strong showing in the latest changes to index provider Standard & Poor's ASX indices, as companies dabbling in financial services are shown the door.

The market volatility over the past six months has led to a turnaround in the fortunes and outlook of some sectors listed on the bourse, with the credit crisis crunching its way into financial stocks.

Companies deleted from the indices include Babcock & Brown Ltd, Allco Finance Group, Challenger Financial Services, and Octaviar Ltd, while troubled firms including ABC Learning Centres Ltd and Centro Properties Group were also removed.

Resource companies were the preferred stocks to be added to several of Standard & Poor's indices, with gold miner Avoca Resources Ltd added to the S&P/ASX 200 list, as was manganese miner OM Holdings Ltd.

Avoca's inclusion comes as no surprise, with some analysts last year naming the company as their preferred pick for 2008. The stock recently started production at its Higginsville project in WA.

Perth-based Perilya Ltd was dropped off the S&P/ASX 200 list following its recent downsizing of operations at its Broken Hill mine on the back of falling commodity prices.

The miner cut 440 jobs from the mine and announced last month that it would halve ore production in order to maintain an economically viable operation at current zinc and lead prices.

Standard & Poor's Index Services associate director Simon Karaban said the majority of companies included in the S&P/ASX 300 were resource firms.

About half of the companies added to the S&P/ASX 300 index came from WA with three of those companies - Brockman Resources Ltd, United Minerals Corporation NL and Cape Lambert Iron Ore Ltd - exploring for the hot commodity of the moment, iron ore.

Other inclusions in the top 300 companies were mining services company Mineral Resources Ltd and explorers Apex Minerals NL, Giralia Resources NL, Strike Resources NL, Carbon Energy Ltd and Moly Mines Ltd.