SYDNEY (Thomson Financial) - Australian shares are expected to open higher on Monday following a positive lead from Wall Street and a move by two major aluminium producers to buy a stake in takeover target Rio Tinto.
US miner Alcoa Inc and Aluminium Corp of China (Chinalco) teamed up to buy a 12 percent stake in Rio on Friday in a deal believed to be worth 14.05 billion US dollars.
Rio is already the target of a three-for-one share offer from BHP Billiton, which has until Wednesday to formalise its offer or wait at least six months to make another tilt.
'I think it's going to be a great day but it will be driven by a lot of the speculation for BHP and Rio, so if we hear from either company early in the piece it could be washed away,' said Juliana Roadley, an equities analyst at CommSec.
'People are starting to come back into the market, there's a lot of discount buying still going on, and you can still get really good quality companies for next to nothing so I think there will be a bit of positioning ahead of the reporting season which really kicks off at the end of this week.'
The S&P/ASX 200 March futures contracted ended its overnight session up 202 points at 5,980.
Chinalco president Xiao Yaqing arrived in Sydney yesterday for a series of government briefings to counter possible opposition to a Chinese-government backed investment in Rio Tinto. Xiao is due to address a media conference at 10.00 am (2300 GMT).
The move by Alcoa and Chinalco is expected to turn the spotlight on the rest of the resources sector as investors position themselves for further consolidation.
'You might see some gains coming through in many of the minor players in the Pilbara iron ore area and the smaller uranium assets as people position themselves, because whoever is going to miss out on this deal obviously is cashed up and ready to pounce and so they will be looking elsewhere,' said Roadley.
On Friday, the S&P/ASX 200 closed up 192.6 points or 3.4 percent at 5,842.9 and the All Ordinaries ended 185.3 points or 3.3 percent higher at 5,882.3.
The Dow Jones Industrial Average capped a big week of gains with another sizeable advance, closing 92.83 points or 0.7 percent higher at 12,743.19, as investors set aside anxiety over news that the economy lost jobs last month and focused on Microsoft Corp's bid for Internet company Yahoo Inc.
In London, shares closed higher with the mining sector the major gainer following news Chinalco and Alcoa had acquired a stake in Rio.
Rio was the biggest riser, up 644 pence or 13 percent at 5,600, while BHP finished 145 pence higher at 1,622 pence.
The FTSE 100 index closed up 149.4 points or 2.5 percent at 6,029.2.
Base metals were higher as severe winter weather and power supply problems disrupted production in China. Zinc finished 4.8 percent higher, while lead gained 3.8 percent, copper rose 2.4 percent and aluminium jumped 1.3 percent.
Other commodities prices finished sharply lower on Friday amid concerns over the impact on demand from a US recession, especially after disappointing January jobs data.
Light, sweet crude for March delivery fell 2.79 US dollars or 3 percent to 88.96 dollars a barrel, while Comex gold for April delivery slipped 14.50 dollars to 913.50 dollars an ounce.
(1 US dollar = 1.10 Australian dollars)
allison.jackson@thomson.com - bhx/ng COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
US miner Alcoa Inc and Aluminium Corp of China (Chinalco) teamed up to buy a 12 percent stake in Rio on Friday in a deal believed to be worth 14.05 billion US dollars.
Rio is already the target of a three-for-one share offer from BHP Billiton, which has until Wednesday to formalise its offer or wait at least six months to make another tilt.
'I think it's going to be a great day but it will be driven by a lot of the speculation for BHP and Rio, so if we hear from either company early in the piece it could be washed away,' said Juliana Roadley, an equities analyst at CommSec.
'People are starting to come back into the market, there's a lot of discount buying still going on, and you can still get really good quality companies for next to nothing so I think there will be a bit of positioning ahead of the reporting season which really kicks off at the end of this week.'
The S&P/ASX 200 March futures contracted ended its overnight session up 202 points at 5,980.
Chinalco president Xiao Yaqing arrived in Sydney yesterday for a series of government briefings to counter possible opposition to a Chinese-government backed investment in Rio Tinto. Xiao is due to address a media conference at 10.00 am (2300 GMT).
The move by Alcoa and Chinalco is expected to turn the spotlight on the rest of the resources sector as investors position themselves for further consolidation.
'You might see some gains coming through in many of the minor players in the Pilbara iron ore area and the smaller uranium assets as people position themselves, because whoever is going to miss out on this deal obviously is cashed up and ready to pounce and so they will be looking elsewhere,' said Roadley.
On Friday, the S&P/ASX 200 closed up 192.6 points or 3.4 percent at 5,842.9 and the All Ordinaries ended 185.3 points or 3.3 percent higher at 5,882.3.
The Dow Jones Industrial Average capped a big week of gains with another sizeable advance, closing 92.83 points or 0.7 percent higher at 12,743.19, as investors set aside anxiety over news that the economy lost jobs last month and focused on Microsoft Corp's bid for Internet company Yahoo Inc.
In London, shares closed higher with the mining sector the major gainer following news Chinalco and Alcoa had acquired a stake in Rio.
Rio was the biggest riser, up 644 pence or 13 percent at 5,600, while BHP finished 145 pence higher at 1,622 pence.
The FTSE 100 index closed up 149.4 points or 2.5 percent at 6,029.2.
Base metals were higher as severe winter weather and power supply problems disrupted production in China. Zinc finished 4.8 percent higher, while lead gained 3.8 percent, copper rose 2.4 percent and aluminium jumped 1.3 percent.
Other commodities prices finished sharply lower on Friday amid concerns over the impact on demand from a US recession, especially after disappointing January jobs data.
Light, sweet crude for March delivery fell 2.79 US dollars or 3 percent to 88.96 dollars a barrel, while Comex gold for April delivery slipped 14.50 dollars to 913.50 dollars an ounce.
(1 US dollar = 1.10 Australian dollars)
allison.jackson@thomson.com - bhx/ng COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.