MIDDAY REPORT
(12pm AEST-7/15/2011)

Australian stocks have started the last trading day of the week in the red, on continued investor concern about US and European economic woes. Ratings agency Standard & Poor´s has this morning warned there is a one-in-two chance it could cut the United States´ prized triple-A rating if a deal on raising the government´s debt ceiling is not agreed soon. The deadline for the agreement is August 2nd. At lunchtime in the East, the All Ordinaries Index (XAO) is down 15.2pts or 0.3pct to 4546.1.

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US crude oil prices fell sharply overnight after Federal Reserve Chairman Ben Bernanke downplayed any potential near term stimulus for the US economy. The energy sector is the worst performing on the local market in early trade, down 0.6pct.

Index leader BHP Billiton (BHP) has fallen 1.7pct to $42.84. The mining giant today announced a planned $14.3 billion takeover of US gas company Petrohawk Energy. BHP and Petrohawk have agreed to the takeover, although it remains subject to several conditions. BHP will pay US$38.75 for each Petrohawk share, a 49.5pct premium to the average trading price of Petrohawk shares on the New York Stock Exchange over the past 30 days.

NewsCorporation (NWS) shares listed in Australian have fallen back into the red, erasing most of yesterday's gains. Overnight the FBI announced it will be launching an investigation into claims the company hacked phones of US citizens as the fall-out over the UK hacking scandal intensifies. NWS shares are down 2.4pct to $14.84.

Flight Centre (FLT) shares are slightly lower, at $21.21 despite a profit upgrade. The travel company has upgraded its pretax profit to between $243 to $247 million as its business benefits from the strong Australian dollar and low international airfares.

The Australian dollar is stronger across the board, buying US107.34c, £0.6643 and €75.71c.

(Juliette Saly, CommSec Market Analyst)

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