Reuters: Hot Stocks: Australia shares edge up on yield play; Cabcharge, Pharmaxis tumble

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Australia shares edge up on yield play; Cabcharge, Pharmaxis tumble May 28th 2013, 07:03 Tue May 28, 2013 3:03am EDT (Adds details, comments) * S&P/ASX 200 up 10.8 points to 4,970.7 * Banks, Telstra up on yield play * Miners further hit by soft demand * Cabcharge, Pharmaxis tumble SYDNEY, May 28 (Reuters) - Australian shares ended 0.2 percent higher on Tuesday, snapping a five-day losing streak, as investors returned to pick up high-yield stocks such as banks following last week's downturn. The benchmark S&P/ASX 200 index added 10.8 points to 4,970.7, according to the latest data. It fell 0.5 percent on Monday. Analysts said the 4,900-point mark was a key support milestone to watch, with the market currently in a correction. "Three times the market has touched this level and has subsequently rallied every time," said Evan Lucas, market strategist at IG in a note. With U.S. and British markets closed on Monday for public holidays, investors are yet to find direction after the market was hit hard last week by turbulence in Japanese equities and uncertainty over when U.S. stimulus measures would be eased off. Local investors continued to favour yield play despite the recent sell-off, underpinning strength in big banks and flagship phone company Telstra Corp Ltd, said Andrew Quin, research strategy coordinator at Patersons Securities in Perth. "With foreign investors selling out because of Australian dollar risk, it's creating an opportunity for Australian investors to pick up good and top-level yielding companies again," Quin said. Banks bounced back from earlier losses, with Westpac Banking Corp climbing 0.9 percent and top lender the Commonwealth Bank of Australia adding 0.6 percent. The big four banks offer on average some 5.6 percent in dividend yield, compared with 3 percent to 4 percent interest on 12-month term deposit accounts. Australia's biggest phone company Telstra was up 0.4 percent, with traded volume the second biggest in the market. The stock currently yields 5.7 percent. Investors were nervous about yield on indications that the Federal Reserve could wind back its massive bond-buying programme later this year, said Credit Suisse equity strategist Damien Boey. "People are in two minds as to what's going to happen, because they can't see what's going to happen to bond yields after the Fed decides to take off its purchases," he said. Iron ore miners ended the session weaker. BHP Billiton Ltd and Rio Tinto Ltd slipped 0.1 percent and 0.4 percent, respectively. Slowing growth in China, Australia's biggest export market, has raised concerns about a downturn in iron ore prices. Taxi services company Cabcharge Australia Ltd dived 15.3 percent to a five-month low, after the Victorian government said it would support revising the service fee charge to 5 percent, from Cabcharges's current 10 percent. Pharmaxis Ltd tumbled 13.0 percent, after the company said it would cut 48 jobs or 30 percent of its workforce after regulatory and clinical trial setbacks. Shares in Australand Property Group declined 0.9 percent, dropping as much as 6 percent in the session, after GPT Group scrapped a plan to buy Australand's $2.4 billion investment property portfolio and its commercial and industrial business. New Zealand's benchmark NZX 50 index was almost flat at the close, up 0.05 point to 4,478.3. New Zealand insurance company Tower Ltd jumped 8.8 percent, after it reported an 87 percent rise in first half profit on gains from the sale of its business and said it would give sale proceeds back to shareholders and revamp its dividend payouts. (Reporting By Maggie Lu Yueyang and Michael Sin; Editing by Jacqueline Wong) Link this Share this Digg this Email Reprints

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