analysts view, page-3

Went short with RIOXOR, on the strength of takeover rumours re:WMR and double top as per previous post. Fingers on the trigger but looks the part.......


Publication: The Age
Section: Business
Page: 12


A RACE to gain control of WMC Resources could be on this week with suggestions that mining giant Rio Tinto is in the throes of preparing an offer to counter a $7.4 billion, $6.35-a-share, bid from Xstrata.
In London, The Sunday Times reported that Rio Tinto was planning to make a counteroffer for WMC Resources and that Rio chief executive Leigh Clifford was in talks with advisers including merchant bank Macquarie. Rio Tinto's local representative did not return calls yesterday.

The Sunday Times article suggested Rio was well placed to make an offer for WMC Resources because, by the end of 2006, Rio's gearing would be close to zero.

On Friday, shares in WMC Resources finished at $7.26, significantly higher than Xstrata's offer - which has been described by WMC managing director Andrew Michelmore as grossly inadequate.

A battle for WMC Resources would coincide with recent strength in commodities markets, which has propelled the value of resource stocks higher and combined with other factors to bolster the performance of the overall sharemarket.

"Booming commodity prices have led to strong investor demand for resource stocks," said Commonwealth Securities chief equities economist Craig James. He said the price of raw materials was soaring.

"Domestic-focused companies have also not been left behind, with the strength of the Australian economy pointing to another solid year of profit growth."

Market commentators are confident that the main indices will hit the 4000 level sooner rather than later. The S&P/ASX 200 and the All Ordinaries Index have been on a record-breaking run in recent weeks and experts say there is no sign that it will end soon. Both indices are above the 3900-point level.

AMP Capital Investors chief economist Shane Oliver said the market strength would continue but the strong Australian dollar could be a constraint.

The dollar has risen further in recent trading, powering towards the US80 ? level last seen in February.

A strong dollar can affect the bottom lines of exporters that have to convert foreign earnings back into the local currency.

"Beyond this there appears to be little to hold share prices down," Dr Oliver said.

Mr James said there were 10 key economic statistics to be released this week and these would be the focus of market watchers