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Australian shrs open soft on war fears, gold soars
12/18/2002 6:32:45 PM

SYDNEY, Dec 19 (Reuters) - Australian stocks lost ground in early trade on Thursday as U.S. war drums upped their tempo, although gold stocks rallied as bullion prices surged to a fresh 5 1/2-year high.

The benchmark S&P/ASX 200 index (AU:1867453) fell 0.3 percent or nine points to 2,977.5 by 10:20 a.m. (2320 GMT), pressured by globally exposed blue chips after Wall Street closed lower.

News Corp (AU:NCP) fell 0.5 percent to A$12.04, BHP Billiton (AU:BHP) fell 1.7 percent to A$9.73 and Rio Tinto (AU:RIO) fell 0.7 percent to A$33.20.

The price of gold rallied more than $3 to $345.50 an ounce in Australian trade amid expectations the United States will declare Iraq in violation of a United Nations disarmament resolution.

Newcrest Mining (AU:NCM) rose 3.4 percent to A$7.05, Lihir Gold (AU:LHG) rose 3.7 percent to A$1.39, Sons of Gwalia (AU:SGW) rose 3.4 percent to A$2.45 and Croesus Mining (AU:CRS) rose 1.2 percent to A$0.88.

The White House has said Secretary of State Colin Powell will respond to Iraq's arms declaration later on Thursday.

Newspaper publisher John Fairfax Holdings (AU:FXJ) rallied 4.7 percent to A$3.13 after upping its growth outlook for first-half earnings before interest and tax (EBIT) to 20 percent from 15 percent.

National Australia Bank (AU:NAB) eased 0.4 percent to A$31.37 ahead of its annual meeting later on Thursday.

On Wall Street, stocks slid for a second straight day as rising tensions over Iraq's arms declaration pushed market gauges to month lows, and a loss at chipmaker Micron Technology (MU) pulled tech stocks lower.

The Dow Jones industrial average (26099400) fell one percent to 8,447.35, the Nasdaq Composite Index (COMP) dropped 2.2 percent to 1,361.51, and the broader Standard & Poor's 500 Index (SPX) fell 1.3 percent to 891.12.

($=A$1.75)