Australian stocks rose as Rio Tinto Group surged to a record after BHP Billiton Ltd. renewed its offer to buy the miner in what would be the biggest acquisition in history.
``If BHP is confident enough about the macroeconomic outlook to do this, then it tells me they've got a positive view for commodities over the next five years,'' said Hans Kunnen, who helps manage $117 billion at Colonial First State Global Asset Management in Sydney, including BHP and Rio stock. ``The outlook is positive for resources stocks.''
BHP dropped after investors and analysts said it may have to add cash to its stock offer for it to be successful.
National Australia Bank Ltd. led financial stocks higher after the lender posted a record second-half profit and Federal Reserve Chairman Ben S. Bernanke spurred speculation of another cut in U.S. borrowing costs.
The S&P/ASX 200 Index advanced 24.10, or 0.4 percent, to 6,545.70 at the close in Sydney, after sliding the most in three months yesterday. It is headed for a 2.3 percent decline this week. Almost the same number of stocks rose as fell.
Rio Tinto, the world's third-largest miner rose to a record with its biggest gain in more than 20 years, jumping A$17.50, or 15 percent, to A$130.90. The number of Rio shares traded today was more than three times the stock's daily average over the past six months. The stock has increased in value by a third in less than eight weeks.
BHP, the world's largest miner, dropped 99 cents, or 2.3 percent, to A$42.25.
BHP said yesterday it will pursue its takeover bid after Rio, which had a market value of $167 billion at today's close, rejected the initial offer. The merger would create a company that controls more than a third of the world's iron-ore market, produces the most coal for power plants, supplies the most copper and owns mines and oilfields on six continents.
Adding cash to the so far all-share offer may ``be the sweetener that could force the hand of Rio's directors,'' said Ric Ronge, who helps manage the equivalent of $1.8 billion at Pengana Capital, including Rio shares.
Australian Prime Minister John Howard said the takeover is a ``market matter'' and that he had been kept informed of the bid by BHP Chief Executive Officer Markus Kloppers, in comments to Melbourne radio 3AW today.
The takeover speculation spurred gains in other mining stocks. Zinifex Ltd., the world's third-largest zinc producer, climbed 64 cents, or 4.3 percent, to A$15.45. Oxiana Ltd., a Melbourne-based gold and copper miner, rose 217 cents, or 5.2 percent, to A$4.28. Alumina Ltd., a partner in the world's biggest producer of the material used to make aluminum, added 39 cents, or 6.1 percent, to A$6.79.
National Australia, the nation's largest lender, climbed A$1.20, or 2.9 percent, to A$43.40. The bank today posted full-year profit of A$4.6 billion ($4.3 billion) and sales of A$14.6 billion. St. George Bank Ltd., the fifth-biggest, added 61 cents, or 1.7 percent, to A$37.51. Macquarie Group Ltd., Australia's largest securities firm, rose A$2.34, or 3 percent, to A$80.90.
Most U.S. stocks gained, led by banks and utilities, after Bernanke said the U.S. economy is likely to ``slow noticeably.'' Interest-rate futures traded on the Chicago Board of Trade put the chance of a third cut in interest rates this year at 90 percent, from 68 percent a week ago.
The S&P/ASX 200's futures contract for December gained 0.7 percent to 6,582. The broader All Ordinaries Index added 0.6 percent to 6,607.40.
The following shares also gained or declined. Stock symbols are in parentheses.
Asciano Ltd. (AIO AU), Australia's largest ports and rail owner, added 59 cents, or 7.1 percent, to A$8.90. Asciano said it has ``no current intention'' to make a takeover bid for Brambles Ltd., the world's largest supplier of wooden pallets used to move and store goods. The Australian Financial Review reported Sept. 26 it was preparing to bid A$20 billion for Brambles with Macquarie Bank Ltd.
David Jones Ltd. (DJS AU), Australia's second-largest department-store chain, rose 12 cents, or 2.5 percent, to A$4.9. David Jones, which reported a 9.7 percent jump in first-quarter sales yesterday, was raised to ``buy'' from ``neutral'' at UBS AG.
Devine Ltd. (DVN AU), an Australian property developer, gained 1.5 cents, or 1 percent, to A$1.54. ABN Amro Holding NV raised the stock to ``buy.''
Fortescue Metals Group Ltd. (FMG AU), which is building a A$2.6 billion iron ore project, jumped A$6.04, or 14 percent, to A$50.55. Fortescue proposed a 10-for-1 share split yesterday aimed at retail investors, the Australian newspaper reported. The split will be put to a shareholder vote soon, Chairman Herb Elliott said at yesterday's annual meeting, according to the report.
Korab Resources Ltd. (KOR AU), a gold, uranium and base-metals explorer, gained 4.5 cents, or 13 percent, to 40.5 cents. Korab said a 33 percent jump in its stock this week may have been spurred by its Sept. 10 acquisition of the Batchelor project from Savanna Mineral Resources Ltd. and a recent rise in the price of gold.
Newcrest Mining Ltd. (NCM AU), Australia's largest gold miner, rose A$1.05, or 3 percent, to A$35.85. Gold gained for a fifth straight week as a decline in the value of the dollar boosted the appeal of precious metals as an inflation hedge. Gold for December delivery reached $848 on Nov. 7, the highest for a most-active contract since Jan. 21, 1980.
Sims Group Ltd. (SGM AU), the world's biggest recycler of scrap metal, added A$1.05, or 4 percent, to A$27.05. Merrill Lynch & Co. raised the stock's rating to ``buy'' from ``neutral'' because of recent declines in the stock.