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merrill lynch lifts target price to $35 Australia's S&P/ASX 200 Climbs to a Record, Led by BHP and Rio
April 5 (Bloomberg) --

Australian stocks rose to a record. BHP Billiton and Rio Tinto Group closed at their highest ever after BHP said it will boost copper and uranium production, and as Merrill Lynch & Co. lifted share-price forecasts on the shares.

The S&P/ASX 200 advanced 44.5, or 0.9 percent, to 5207.0 at the 4:15 p.m. close in Sydney. About 14 stocks rose for every five that fell.

New Zealand's NZX 50 Index added 0.6 percent to 3762.95 at the 5 p.m. close in Wellington.

BHP, the world's biggest mining company, climbed 24 cents, or 0.8 percent, to A$29.49. Rio Tinto, the third biggest, rose A$1.80, or 2.3 percent, A$81.51.

BHP plans to spend $5 billion to double copper production and almost quadruple uranium output at its Olympic Dam mine in Australia as rising demand from China causes prices to surge, Richard Yeeles, manager of corporate affairs at the Melbourne- based company, said today.

China, Asia's biggest energy consumer, signed agreements this week clearing the way to buy uranium from Australia for the first time as it seeks to cut reliance on oil and coal for power.

Vicky Binns, an analyst at Merrill Lynch in Sydney, raised her 12-month, share-price forecast for Rio by 19 percent to A$95. She lifted her 12-month, share-price forecast for BHP by 30 percent to A$35.

`Significant Organic Growth'

Rio and BHP ``are generating sustainable strong free cash flows from low-cost long-life assets with significant organic growth,'' Binns said in a note today.

The companies have ``significant valuation upside from changes to long-term uranium prices and increased production from expansions and mine life extensions,'' said Clarke Wilkins and Craig Sainsbury, analysts at Citigroup Inc. in Sydney.

The S&P/ASX 200 Index's futures contract for June added 1.3 percent to 5232. The broader All Ordinaries Index rose 0.8 percent to 5159.0.

The following shares also rose or fell. The stock symbols are in brackets after the company names.

Australian stocks:

Gold shares: Gold prices fell 0.6 percent to $590.60 an ounce in New York after yesterday peaking at the highest since January 1981. Newcrest Mining Ltd. (NCM AU), Australia's biggest gold miner, slid 50 cents, or 2.1 percent, to A$23.30. Oxiana Ltd. (OXR AU), Australia's second-biggest gold miner, dropped 12 cents, or 4.2 percent, to A$2.74.

Challenger Financial Services Group Ltd. (CGF AU), an investment services company, rose 9 cents, or 2.6 percent, to A$3.58. Arjan Van Veen, an analyst at Credit Suisse Group, raised his recommendation for the stock to ``outperform'' from ``neutral,'' citing relative share price movements.

Great Southern Plantations Ltd. (GTP AU), a forestry investor, dropped 12 cents, or 2.9 percent, to A$4.08. The Australian Financial Review newspaper said the government may amend timber industry tax rules which allow investors to claim a full deduction for money they give to managed investment schemes which invest in timber plantations.

OneSteel Ltd. (OST AU), Australia's second-biggest steel maker, fell 4 cents, or 1 percent, to A$4.08. Andrew Gibson, an analyst at Goldman Sachs JBWere Pty, cut his recommendation for the stock to ``market perform'' from ``outperform,'' saying ``it's hard to see a catalyst to drive positive near-term earnings revisions or a re-rating.''

Run Corp Ltd. (RNC AU), a residential property management company, jumped 5.5 cents, or 17 percent, to 38.5 cents, recovering from yesterday's record low 33 cents. The company said yesterday in a statement to the stock exchange that losses for the financial year ending June 30 would double to A$13.4 million.

Telstra Corp. (TLS AU), the nation's biggest phone company, fell 5 cents, or 1.3 percent, to A$3.69. Four in five Australians won't invest in Telstra Corp. if the government proceeds with its plan to sell its remaining shares in the telephone company, News Corp.'s news.com.au Web site said, citing a poll of 1,186 people.