Markets Live: Stocks close lower after China data

4.25pm: While the ASX was relatively flat today, here's a look at the some notable movers:

• Telstra: +1%
• Westfield Group: +0.6%
• Westfield Retail: -0.98%
• Qantas: -1.32%
• News Corp: -1.48%

4.16pm: The gold sub-index led the losses, down 0.7 per cent, followed by materials which lost 0.6 per cent. Health fell 0.5 per cent and energy ended 0.4 per cent lower. Telecommunications bucked the trend, adding 0.9 per cent.

4.12pm: The market has closed lower, ending a four-day winner streak. The benchmark S&P/ASX200 fell 6.4 points, or 0.1 per cent, to 4262.8, while the broader All Ords dropped 6.7 points, or 0.2 per cent, to 4282.7.

3.55pm: Brent crude slipped toward $US104 per barrel today after softer official manufacturing data from top energy consumer China chipped away at a fragile market sentiment, while fading hopes for US stimulus measures also weighed on prices.

Brent crude fell 51 cents to $US104.41 a barrel, recovering from an earlier drop to a near one-week low of $US104.06. US crude dipped 24 cents to $US87.82 per barrel, up from a low of $US87.51 hit earlier in the session.

3.47pm: James Packer’s casino operator Crown Ltd, announced plans spend $568 million building a 6 star hotel at its Perth casino and boost its gambling facilities as part of a deal with the West Australian Government.

The luxury hotel, to be known as Crown Towers Perth, adds to the $2.2 billion Crown has spent on its Australian casino resorts in recent years in a bid to lure Asian VIP gamblers from the strong competition in Singapore and Macau.

Crown's shares are up 0.06 per cent.

3.40pm: With minutes to go before the close of trade, here's what CMC Markets senior trader Tim Waterer had to say about the day's action:

• The unified sentiment expressed by EU leaders that initially signalled a Green Light for traders has now turned to more of a flashing amber colour as we await outcomes from the FOMC and ECB meetings. While September seems a more plausible timeline for the announcement of QE3 by the Federal Reserve, in the case of the ECB traders will be demanding some immediacy regarding central bank action.
• Given the run higher by risk assets generally since Mario Draghi signalled his defence of the Eurozone last week, heading into the ECB press conference on Thursday the downside risks seem to outweigh risk to the upside by some degree. The premise for the push higher in equities, commodities and the Euro was that the ECB will step up its game, pronto. Hence the Thursday ECB press conference is shaping as a D-Day of sorts for the eurozone if good intentions are not backed up by decisive actions.
• Circumspect trading was the order of the day on the Australian market, with some apprehension creeping in amongst investors on the doorstep of key FOMC and ECB meetings. This naturally led to range-bound conditions on the ASX today, while some traders took the opportunity to lock in some profit after the recent winning streak on the local bourse. How the Australian market rounds out the week over the next two days will be largely subject to how the FOMC and ECB meetings are received by the broader global market.

3.32pm: After a lengthy hiatus period, the NSW government has given the greenlight to the second mine in a day, with the $73.5 million Hera gold and base metal mine at Cobar given the go ahead, after allowing the development earlier today of a gold mine near Dubbo.

The Hera mine, which is being developed by YTC Resources at Coba, has an initial estimated mine life of 7.3 years, although that is likely to be extended with additional reserves.

"The hera project will establish a robust high margin operatio with the mining and processing infrastructure that can be leveraged to the future integration of the Nymagee copper deposit and the future resource additions and discoveries that will flow from the ongong exploration of the field," the managing director Mr Rimas Karaitis said.

3.26pm: United States Treasury Secretary Timothy Geithner called on European leaders to do more to solve the region's debt crisis, including lowering interest rates for those countries that are undertaking painful reforms.

Geithner said the eurozone had to take steps including "bringing down interest rates in the countries that are reforming and making sure those banking systems can provide the credit those economies need."

3.20pm: Here's a quick look at markets around the region:

• Nikkei(Japan): -1.08%
• Shanghai: +0.95%
• Taiwan: -0.13%
• South Korea: -0.32%
• Singapore: +0.18%
• New Zealand: -0.42%

3.12pm: More from PaperlinX (see 1.03pm post) and the news that it has appointed Andrew Price as a non-executive director of the company.

The struggling company's shares have surged 40 per cent this afternoon - up 2 cents to 7 cents.

3.08pm: There was a sign of things to come in London this week, and it had nothing to do with the waning fortunes of Australia's swimming team.

Across town in the offices of BlackRock Inc, a fresh way of doing business was being unveiled, and Australia's mining and resources sector might want to take note, writes Peter Ker.

Already the world's biggest investor in resources stocks with an estimated $36 billion sunk into the sector, BlackRock announced that it was investing $110 million in an iron ore company.

Nothing unusual there, except that BlackRock was not buying shares in the miner - London Mining - but rather securing a 2 per cent royalty on all future iron ore sales from the company's Marampa mine in Sierra Leone.

3.04pm: Here's an afternoon read from our travel section which shows the Olympics may not be the tourism hit that Londoners had hoped for:

Tube trips are surprisingly easy, shopping on the high street is down in central London, hotel bookings and prices are off their peak, while theatres and London cafes suffer the Olympic effect.

Economists have long warned that the Olympics may not provide much of a boost at this stage for Britain's recession-hit economy as most of the construction work and investment has been done in the run-up to the Games. Now, early evidence appears to be bearing this out.

Warned repeatedly for months about the strain London's transport system would experience with the expected arrival of 11 million visitors to the Games, Londoners and the usual non-Olympic seasonal visitors appear to have vanished from the underground train system, the shopping districts, theatres, hotels and abandoned other traders who benefit from tourism.

Story here.

2.58pm: South Korea's exports have fallen sharply in July compared to a year earlier, official figures show, as the export-dominated economy grapples with the global economic downturn.

Exports in July dropped 8.8 per cent year-on-year to $US44.6 billion, while imports fell 5.5 per cent to $US41.9 billion, according to the Ministry of Knowledge Economy.

The balance was a trade surplus of $US2.7 billion, the sixth consecutive month the country has posted a surplus.

In June exports increased 1.1 per cent year-on-year while imports fell 5.5 per cent to leave a revised $US4.91 billion surplus.

2.50pm: In Japan, Olympus shares have taken another hit after the scandal-battered endoscope and camera maker revealed it may have broken a US law that bans corporations from offering bribes to win business in overseas markets.

The 6 per cent tumble in Olympus' stock also follows a lawsuit by medical device maker Terumo, a 2.5 per cent stakeholder and one of many firms seeking to tie up with Olympus, which seeks damages for loss of shareholder value from the accounting fraud that rocked the firm last year, Reuters reports.

Olympus in October informed the US Department of Justice about travel, meal and entertainment expenses paid by its US subsidiary to doctors in a training programme in Brazil, a company spokesman Osamu Kobayashi said, confirming a Bloomberg report.

The expenses may be a violation of the Foreign Corrupt Practices Act.

"Olympus might have to be investigated further because of this," said Nanako Imazu, an analyst at CLSA Asia-Pacific Markets in Tokyo.

2.38pm: Coal explorer Blackwood Corp is still waiting for $28.4 million it is owed after mining entrepreneur Nathan Tinkler delayed paying for his one-third stake in the group.

Blackwood is sweating on the money to fund drilling of its coal tenements in Queensland. It has revealed that Mr Tinkler’s private vehicle Mulsanne Resources had asked to extend until August 13 a deadline to pay for its 33.85 per cent share placement.

Blackwood agreed to the extension. That will be more than a month since Blackwood shareholders approved the placement on July 12, with payment originally expected to have been made within a week.

The move is of interest to the market, with investors already doubting Mr Tinkler’s ability to raise funds for what is considered a high priced $5.3 billion bid to take over Whitehaven Coal.

Investors’ concerns are reflected in Whitehaven’s share price which has not approached anywhere near Mr Tinkler’s 50 per cent premium offer price of $5.20 a share. It climbed from $3.45 to above $4 after the takeover offer went public, but has fallen 9 cents to $3.58.

2.27pm: In Hong Kong, stocks are flat at the break, rising just 0.04 per cent ahead of the results of a key US Federal Reserve meeting.

The benchmark Hang Seng Index is up 7.23 points to 19,804.04

2.21pm: Genworth Financial has swung back into profit in Australia, but the mortgage insurer continues to be pressured by a high level of payouts, Eric Johnston reports.

US-based Genworth shelved the partial stockmarket listing of its Australian arm earlier this year after a surge in payouts against soured Australian mortgages pulled the insurer into a loss during the March quarter.

But latest accounts lodged by its US parent show Genworth's Australian arm returned a profit of $US44 million for the June quarter. This was a rebound from a $US21 million loss in the March quarter.

More here.

2.14pm: Shares in market darling Sirius Resources are now fetching prices ten times higher than the same time last week, and the junior explorer’s amazing run is having a broader impact on the market too, Peter Ker reports.

Sirius’ encouraging find of copper and nickel near Norseman in WA has inspired those nearby to dust off their drill rigs.

Matsa Resources, which holds tenements next door to Sirius has declared it will “immediately accelerate” drilling in the belief there is a geological link between their Symons Hill tenement and Sirius’ Nova deposit.

Matsa has already surfed some of the Sirius wave: its share price rose from 12 cents to 25 cents last Thursday on the back of Sirius’s 689% rise from 5 cents to 45 cents.

Meanwhile Sirius’ is continuing its surge north, today trading 6 cents higher, or 11.7 per cent, at 57.5 cents.

1.59pm: The NSW Premier, Barry O’Farrell, says a ‘‘lack of understanding’’ of state-owned enterprises has shaped Australia’s attitude toward Chinese foreign investment in Australia, Philip Wen reports.

Speaking from Chengdu, where he is leading a trade and investment delegation this week, Mr O’Farrell launched a report prepared jointly by KPMG and the University of Sydney which said the true nature of Chinese state-owned enterprises (SOEs) was ‘‘poorly understood’’, which created ‘‘unwarranted anxieties’’ toward Chinese investment in Australia.

Doug Ferguson, the head of KPMG Australia’s China Practice, told BusinessDay that Chinese SOEs were driven more by the desire for profit margins than by political considerations, and that there needed to be a ‘‘fundamental shift’’ in how they were perceived by Australia.

1.46pm: Asian markets are generally lower as nervous investors awaited the outcome of a key US Federal Reserve meeting amid low expectations of any new easing measures.

The Asian falls have been spurred by European stock markets sliding into the red on Tuesday as traders fretted about whether the European Central Bank (ECB) would announce decisive monetary policies later this week.

Tokyo is 1.07 per cent lower by the break, Seoul is 0.17 per cent lower and Taipei has shed 0.33 per cent.

1.22pm: It appears a story written yesterday by Michael West about G4S, the company which runs prisons in Australia but is better known for bungling security arrangements for the London Olympics, struck a chord. Michael West wrote:

We first brought the Australian arm of G4S into the picture as one of the many large foreign companies to benefit from government contracts but which was also late to file its annual financial reports with our corporate regulator, or didn't bother to file at all. Read the full story here.

Well, those accounts have turned up one day after the group was shamed for failing to comply. In a note to the Markets Live blog a few minutes ago, West told us:

It seems that G4S has lodged three documents overnight with ASIC. They appear to relate to the missing two years of accounts for ACF and a supplementary document related to 2011 accounts in respect of G4S Australia Holdings Pty Ltd.

1.11pm: The Aussie dollar has regained most of the losses it experienced after the China PMI numbers arrived. It was recently buying $US1.0493 after hitting $US1.0463 at 11.26am. But it is still a long way off today's high of $US1.0521, reached at 3.36am. It was also buying 85.34 euro cents, 66.95 pence, and 81.84 yen.

NAB head of research Peter Jolly said the China figures were a negative for the Australian currency.

‘‘The Chinese PMI was a little bit under what people were expecting, we had a flash estimate last week that suggest that manufacturing recovered in July,’’ Mr Jolly said. ‘‘Today's number suggested a slight slippage."

1.03pm: The man who tried to unseat PaperlinX chairman Harry Boon has been appointed to the board of the struggling paper merchant. PaperlinX said it had appointed Andrew Price as a non-executive director of the company, effective from September 1, 2012.

At an extraordinary general meeting of PaperlinX shareholders in March, Mr Price sought to oust Mr Boon as chairman and gain his seat on the PaperlinX board. But PaperlinX shareholders endorsed Mr Boon by a narrow margin.

Mr Price, an experienced and former manager in the paper sector, and his associates held around 30 million shares in PaperlinX at the time.

12.54pm: Australian consumer confidence may still be low but that hasn’t stopped online sales increasing by 19 per cent in the last 12 months.

The National Australia Bank Online Retail Sales Index shows online spending in June was up 19 per cent from June last year, and up 14 per cent from May.

But the growth rate for online retail sales is significantly lower than the previous year but has still risen more than sales from bricks and mortar stores. Online retail growth was up 32 per cent in June last year compared with the same month in 2010.

12.50pm: BBY broker Gavin Long said the China PMI numbers was driving the weakness in local shares.

‘‘They’re still waiting for previous stimulus packages to work in the second half of the year.’’

Investors are selling off stronger-valued shares before key meetings at the US Federal Reserve and the European Central Bank, Mr Long said.

‘‘With the market up in the last few days we can probably expect a bit of profit taking today ahead of those potential announcements.’’

12.44pm: And just as you post a comment about the ASX200 is sliding deeper into negative territory, it bounces off its intraday low with some vigour. Stocks are still down about 0.2 per cent, or close to where they opened. It looks like that's the range we're stuck in today - somewhere between 0.1 and 0.3 per cent lower. There's very little in the news diary for this afternoon to break it out of that range. Still, you never know what's around the corner ...

12.41pm: Today's factories data from China has boosted chances of another rate there, says one analyst.

‘‘It is clear that the manufacturing sector is doing very poorly and requires policy support,’’ Dariusz Kowalczyk, a Hong Kong-based senior economist at Credit Agricole CIB, said in a research note today.

The chance of an interest-rate cut is ‘‘up to about a third now from a quarter yesterday,’’ and a reduction in banks’ reserve requirements is ‘‘fairly imminent,’’ he said.

The benchmark Shanghai Composite Index had fallen 14.5 per cent from this year’s peak on March 2 through yesterday on concern the government isn’t loosening monetary policy quickly enough to stem a slowdown that’s hurting corporate earnings.

12.35pm: Looking at the blue worm above, the ASX200 has taken a fairly decisive turn downwards now, edging into fresh lows for the day. Both the All Ords and the ASX200 are 0.3 per cent lower.

12.30pm: Shares in Nufarm are down six cents, or 1.10 per cent, at $5.41. As mentioned a few minutes after the agricultural chemicals supplier conditionally agreed to pay $43.5 million to settle legal proceedings brought against the company by some of its shareholders.

12.26pm: More on the housing data here. HSBC chief economist Paul Bloxham said the official figures were consistent with the RP Data Rismark July capital city home value data, also released today, which showed capital city home values increasing for the second consecutive month.

‘‘It looks like the housing market has found its bottom,’’ Mr Bloxham said. ‘‘We think with interest rates now below a neutral setting, house prices are likely to stabilise in the second half of this year.’’

12.22pm: Agricultural chemicals supplier Nufarm has conditionally agreed to pay $43.5 million to settle legal proceedings brought against the company by some of its shareholders.

The shareholders, represented by law firms Slater & Gordon and Maurice Blackburn, had alleged that Nufarm shareholders had suffered loss as a result of Nufarm’s failure to adequately inform the Australian Securities Exchange of the impact of the declining international glyphosate market on its business, profitability and likely debt position at various times during the 2009/10 financial year.

Nufarm had denied the allegation. Nufarm has entered the agreement without any admission of liability.

12.11pm: Some comment from JP Morgan economist Ben Jarman on the housing data:

‘‘All in all this report is consistent with our view that house prices are proving fairly resilient and not really declining at any rapid rate,’’ Mr Jarman said.

Mr Jarman said the series of official interest rate cuts since November will help the housing industry into the latter half of 2012.

‘‘We don’t think that is going to cause the housing market to catch fire, but it is cushioning and insulating from the downside for sure,’’ he said.

12.05pm: ASX200 now back to its lows for the day. Here's a bit of corporate news from Beach:

Oil and gas producer Beach Energy’s chairman Bob Kennedy is stepping down after almost 17 years in the position.

Mr Kennedy confirmed to the board that he would not be seeking re-election as a director at November’s general meeting.

Beach Energy is a South Australian-based oil and gas production company that operates mainly in the Australian outback.

Mr Kennedy has been a director at Beach since 1991, became chairman in 1995, and during his tenure has seen the company surge into the ASX top 100 with a global portfolio of assets.

Meanwhile, Beach’s managing director Reg Nelson has resigned from his position as a director of Ramelius Resources to focus on his Beach activities.

11.59am: A bit more on house prices - how they are changing across the nation:

Q/Q Y/Y
Weighted average +0.5 -2.1
Sydney +1.4 -0.9
Melbourne -0.4 -4.8
Brisbane +0.1 -2.7
Adelaide +0.5 -1.3
Perth +0.6 +1.1
Hobart -0.4 -3.2
Darwin +5.1 +12.3
Canberra -1.3 -2.6

Those stats are from the ABS.

On a yearly basis, the 2.1% drop in the June quarter was slower than the 3.5% revised drop in the March quarter. Then again, the June quarter retreat was the fifth quarterly retreat in a row.

11.53am: Telstra continues to shine on an otherwise dullish day for stocks. The telco has climbed to fresh highs (the best since December 2008), and not surprisingly it's the biggest 'plus' for the ASX200.

In recent trading, the stock was up 4 cents or 1% to $4.04.

11.44am: Shares in infrastructure investor and operator DUET Group have continued to rally, gaining another 4 cents to $2.12, adding to yesterday's gains, as investors continued to react positivelyto plans to internalise management - as BusinessDay's Brian Robins reports.

Even though the proposal will cost more than $80 million, mostly to be paid in scrip, it will mean the company will no longer have to fork out for performance fees to the management company - AMP and Macquarie Bank.

This comes a matter of weeks after Duet paid them $16 million due to its outperformance against the ASX200 benchmark.

"Post internalisation, Duet will represent a far more investible proposition, particularly in light of having recently consolidated its asset portfolio," JP Morgan said in a note to clients this morning.

"Internalilsation will render Duet - previously protected from takeover by its external management structure - attractive to investors with an eye for quality Australian utility assets."

11.39am: More housing prices news:

Australian capital city house prices rose 0.5 per cent in the June quarter, official data showed.

This compares with an upwardly revised 0.1 per cent fall in the March quarter.

In the year to June, the house price index fell 2.1 per cent, the Australian Bureau of Statistics said on Wednesday. Economists had expected a fall of 0.7 per cent for the June quarter.

11.22am: If the Australian economy is in the slow lane, someone forgot to tell these two mates, who are riding rings around retail.

Last night, Jason Wyatt and Sam Salter received a yellow jersey of their own when bikeexchange.com.au was named the Telstra Victorian Business of the Year.

11.17am: Chris Weston from IG Markets says the Chinese PMI result, while disappointing because it falls below economists’ expectations, is not ‘‘hugely disappointing’’ because it shows Chinese manufacturing is in expansionary territory.

The upside might be quicker and more aggressive stimulus by the Chinese government. ‘‘It feeds into the market’s expectations that the People’s Bank will make another reserve ratio cut,’’ Mr Weston said.

‘‘Last night Premier Wen mentioned they would continue fine tuning the economy ... which is code for another reserve ratio cut sooner rather than later.’’

11.07am: The China PMI numbers marked the lowest reading since November in the latest sign that growth in the world's second-biggest economy is weighed down by cooling exports, factory output and fixed asset investment.

Economists polled by Reuters this week had expected July's official PMI to edge up to 50.3, above the 50 point level that demarcates expansion from contraction.

A flash PMI published last week by HSBC rose to a five-month high of 49.5 in July, boosted by a pick up in output and signs of improvement in new export orders. But the employment index fell to a 40-month low.

11.04am: The Aussie dolar has eased on the China numbers. It fell from just below $US1.05 to $US1.0472 when the numbers arrived.

11.02am: China's PMI data has arrived and it's lower - down to 50.1, lower than the expected 50.5 i9n a Bloomberg poll, but still not in contraction territory.

11.01am: IG Markets institutional dealer Chris Weston said the local market had followed Wall Street’s overnight lead.

Local shares would stay in a holding pattern ahead of any announcements by the US Federal Reserve on Wednesday night and the European Central Bank (ECB) on Thursday, he said.

‘‘We’ve followed the US last night,’’ Mr Weston said.

‘‘Markets are now pricing in some aggressive responses in Europe and if we don’t get them, because the Germans are against a lot of the action, then we could see a bit of a sell off later in the week.’’

10.56am: And here’s why Rio Tinto stocks are outperforming BHP and FMG. The global miner is cutting staff in Australia and closing its Sydney office as it battles falling commodity prices and threats to demand from Europe's debt crisis.

Around 30 support and services staff in Sydney and an undisclosed number of employees at the company's much larger operations in Melbourne would be cut, Rio Tinto's Australian manager David Peever told Reuters today.

"We are undertaking a review of our support and services functions. There will be a reduction in the size of our Melbourne office and, yes, we do intend to close our Sydney office as well," Peever said from Paris.

"It's just making sure we are building in resilience in our business to deal with what is essentially a difficult time. We are seeing downturns in commodity prices, European circumstances are hovering over us, and we need to make sure we are very measured in terms of our approach to cost control," he said.

10.50am: Mixed returns for the big miners in early trade:

• BHP is 0.7% lower to $31.71
• Rio is 0.5% higher to $53.47
• Fortescue is 0.36% lower to $4.12

10.44am: Shares in gold miner Kingsgate remained under pressure, falling for the eighth straight day, and dropping below the $4 level for the first time in more than three years.

In morning trading, it was holding at $3.99, down 7c, but clear of the session low of $3.93. The stock is out of favour on disappointing June production data, released last week, with investors unwilling to buy until the company gives clearer indications of likely gold production for the financial year to June, 2013, and until the company finalises the costs of a proposed new mine in Chile.

Kingsgate has a number of funding demands over the next few years - a $20 milion-plus upgrade of its Challenger mine in South Australia, the Chiile mine development as well as a new silver mine project in NSW.

Analysts said clients are moving their funds out nof Kingsgate to other gold miners, until they can see a clearer outlook for both Kingsgate's production and earnings. Morningstar has cut to 57c a share from 72c a share its forecast for year to June 2012 earnings, and it sees a further deterioration to 44c a share for the year to June, 2013.

10.40am: Other companies performing strongly this morning include:

• Emeco Holdings: +5.26%
• Lynas: +4.97%
• Coalspur: +4.96%
• Goodman Fielder: +4.12%
• Australand: +2.12%

10.33am: Shares in Intrepid Mines have jumped 27.3 per cent in early trade after the company announced it had placed 27 million ordinary shares to prominent Indonesian businessman Surya Paloh.

The company told shareholders today that Mr Paloh, who media and energy interests in Indonesia, would work "closely with the company" to help with "engagement with key Indonesian stakeholders, particularly both central and local government". Read the company announcement here - PDF.

Intrepid Mines last week posted a first-half loss of $30.86 million as it aimed to resolve joint venture problems and legal issues at its Indonesian operations.

10.24am: Here are the stocks pushing the materials sub index lower:

• Aquarius Platinum: -5%
• Mount Gibson Iron: -3.14%
• Alacer Gold: -2.87%
• St Barbara: -2.37%
• Atlas Iron: -2.32%

10.19am: Aussie stocks are now down 0.3 per cent, led by the materials sub index, which has lost 0.7 per cent. Here's how the other sub indices on the ASX200 are performing:

• Energy: -0.5%
• Financials: -0.27%
• Consumer discretionary: -0.24%
• Utilities: -0.2%

• Telecoms: +0.6%
• Info tech: +0.14%

10.14am: In early trade, the All Ordinaries index is 5.8 points lower, or 0.1 per cent, to 4283.6, while the benchmark S&P/ASX200 is 5.6 points lower, or 0.1 per cent, to 4253.6.

10.09am: A bit more here on Country Road. Country Road chairman Ian Moir said the acquisition would give Country Road a stronger position in the Australian retail sector.

‘‘The acquisition of Witchery Group creates one of Australia’s largest speciality fashion retailers with complementary brands and a strong position in the mid- to upper-tier specialist retail sector,’’ Country Road chairman Ian Moir said.

‘‘The acquisition delivers an attractive portfolio of owned brands, greater scale, diversified revenue streams and industry leading margins.’’

Country Road on July 17 announced its total sales had grown by 1.8 per cent on the previous year to $419 million but Australasian sales had contracted 2.6 per cent, with like-for-like sales down 6.6 per cent.

10.07am: Early take - shares ease early. ASX200 is down 0.2 per cent while markets open.

9.59am: And just before markets open, Australian bond futures prices are slightly higher as investors play it safe ahead of the outcome of the US Federal Reserve and European Central Bank (ECB) meetings this week.

St George senior economist Jo Heffernan said traders were moving to safe-haven investments because of doubts the ECB will take decisive action.‘‘Comments from Germany’s finance ministry that there was no need to give the ESM (European Stability Mechanism) bailout fund a banking licence dented sentiment,’’ Ms Heffernan said.

At 8.30am the September 10-year bond futures contract was trading at 97.045 (implying a yield of 2.955 per cent), up from 96.995 (3.005 per cent) on Tuesday. The September three-year bond futures contract was at 97.520 (2.480 per cent), up from 97.480 (2.520 per cent).

9.57am: Country Road has agreed to buy fellow fashion retailer Witchery Australia for $172 million.

The acquisition will be partly funded by through a one-for-two pro-rata renounceable rights issue at $2.66 per share to raise $92 million. Country Road's 88 per cent shareholder Woolworths has said it will participate in its pro-rata share of the entitlement.

9.55am: Stan Shamu, a market analyst at IG Markets, expects the Australian market to open slightly down, in line with futures expectations, but says it could rally late morning if Chinese manufacturing data meets or exceeds predictions.

‘‘The miners will definitely be the main beneficiaries if the Chinese result is positive,’’ Mr Shamu says.

If China disappoints, Mr Shamu says defensive stocks will likely outperform today as investors herd to safety. Mr Shamu says the Australian sharemarket is in a ‘‘holding pattern’’ ahead of key announcements by the European Cental Bank and the US Federal Reserve.

In particular investors are wondering whether ECB president Mario Draghi can live up to his statement last week that he will do ‘‘whatever it takes’’ to preserve the euro.

‘‘There’s a lot of hope around ... but do they have the ammunition and the sense of togetherness within the ECB?’’

Mr Shamu says investors are latching onto any news coming out of China, the US and Europe, and are less interested in today’s Australian data - June quarter house prices and July commodity prices.

9.51am: Australian manufacturing activity contracted at a faster rate in July as costs rise and the global economic slowdown takes its toll, a private survey shows.The AiG/PwC Australian performance of manufacturing index (PMI) fell 6.9 index points to 40.3 in July. Readings above 50 indicate an expansion in activity.

Falls in activity in July were largest in the paper, printing and publishing sector, as well as the textiles and basic metals sub-sectors.

PriceWaterhouseCoopers’ (PWC) partner for Economics and Policy Jeremy Thorpe said the July index was at a three-year low.

‘‘Worryingly, the US, Japan, China and the euro zone are all simultaneously contracting and posting results below the benchmark reading of 50 points,’’ Mr Thorpe said in a statement accompanying the survey’s release.

9.48am: In local housing news today, home prices recorded their second consecutive monthly rise in July as the effect of recent interest rate cuts filtered into the market, but prices rose more slowly than a month earlier.

RP Data-Rismark's capital city home price index rose 0.6 per cent in July following a 1 per cent rise in June which ended months of flat to lower prices.

Prices rose 1.2 per cent in Sydney and 1.4 per cent in Melbourne, while they slumped 2.5 per cent in Adelaide. In Perth they declined 0.5 per cent, while in Brisbane they slipped 0.4 per cent.

9.44am: BHP is making news this morning, saying it is focussing on cutting costs as commodity prices fall and operating expenses rise. Bloomberg reports the company is reviewing its overhead costs and the sequencing of its major projects.

The Bloomberg report, which cited a emailed statement, said "iron ore projects in execution" would continue. BHP has been due to decide on three major projects by year end: Olympic Dam, Port Hedland outer harbour and Jansen potash in Canada.

9.41am: Kathy Lien also downplayed expectations of this week's US Fed meeting, which kicks off today US time. She said were not expecting any major announcements from Bernanke et al.

“The Federal Reserve and the European Central Bank are no longer under pressure to make any brash decisions,” she said.

“Recent stability gives the Fed the luxury of time, allowing them to shelve the discussion of QE3 (quantitative easing) for a few more weeks.

“The meeting in September is much more important and we should get a good sense of whether QE3 is a realistic consideration for the Fed when central bank officials convene in Jackson Hole for their annual economic summit in late August.”

9.38am: Looking at that Chinese PMI release, Kathy Lien, managing director of foreign exchange strategy for BK Asset Management, said the release of China’s official and HSBC’s independent manufacturing PMI data today would be watched closely by investors.

“When HSBC first put out their estimates for Chinese manufacturing last week, the data showed a smaller contraction, which the market interpreted to be good news for China and risk appetite,” she said.

“Hopefully this momentum will be sustained and confirmed by the national release.”

9.35am: We've got a fairly busy day of economics data today:

• Australian Bureau of Statistics house price index for the June quarter
• Reserve Bank of Australia index of commodity prices for July
• AiG/PwC performance of manufacturing index for July
• Chinese manufacturing PMI, due at 11am

9.32am: Aussie stocks are in for a soft start after offshore markets eased as investors await the outcomes of a series of central bank meetings this week.

For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:

• The SPI was 18 points lower at 4210
  
• The $A was trading at $US1.0506
  
• In the US, the S&P500 lost 0.43% to 1379.33
  
• In Europe, the FTSE100 lost 1% to 5635.28
  
• Gold lost 0.6% to $US1614.60 an ounce
  
• WTI crude oil lost $US1.72 to $US88.06 a barrel
  
• RJ/CRB commodities index lost 1% to 299.5

9.30am: Good morning everyone. Welcome to the Markets Live blog for Wednesday.

This blog is not intended as investment advice

BusinessDay with agencies