Australian dollar hits three month high: Midday Roundup

The Australian dollar rallied to its highest level in almost three months, hitting an overnight high of 104.50 US cents at 9pm last night.

This followed on from strong investor sentiment figures from Germany, good United States manufacturing data and higher-than-expected Chinese growth figures lifting risk sentiment overnight.

However, most of the gains were quickly lost, as concern about the European debt crisis resurfaced.

At 11.00 AEST, the Australian dollar was buying 103.75 US cents.

Value of building works flat in September: ABS

The value of total building work edged up 0.1% to $19.47 billion in the September quarter, official figures show, following a fall of 2.4% the previous quarter.

The Australian Bureau of Statistics says the seasonally adjusted value of new residential work fell by 1.9% to $9.53 billion, with work done on new houses down 2.6% and new other residentail building slipping 0.3%.

The seasonally adjusted estimate for the value of non-residentail building work done in the quarter was up 2.7%, following a 1.5% fall in the June quarter.

New car sales fall 2.9% in December

Sales of new motor vehicles in Australia fell in December, but by less than expected, according to ABS data released this morning.

According to the ABS, 84,043 new cars were sold in Australia in December. This gives a seasonally adjusted drop of 2.9%.

However, this was less than the expectations of many analysts, who were projecting a 6% fall.

Australian stocks flat after weak overseas leads

The Australian market has hardly shifted this morning, defying expectations that it would fall in early trade.

Before midday, the ASX200 was down 0.12% down to 4210.70.

Few of the widely held stocks moved very far. Most of the big banks fell slightly while News Corporation rose 1.25%.

The biggest gains and falls were seen in energy and mining companies.

Lynas Corporation shares soared 4.93%, after announcing this morning it was increasing by 37% the mineral resource estimates at its major Mount Weld project in Western Australia.

Miner Gindalbie Metals also recorded a large rise, as did White Energy Company.

Alacer Gold Corp fell 4.54%, while Energy Resources of Australia lost 4.83%.

Oakajee told to use Chinese suppliers

Oakajee Port & Rail was told to import Chinese equipment and services where possible, according to a report in this morning’s The Australian.

This follows on from reports in the same newspaper of Australian Industry Group telling the Government it had heard of Australian manufacturers being locked out of supplying to miners due to Chinese export contracts.

However, in a report in today’s Australian Financial Review, the Minerals Council of Australia said there was no empirical evidence that such clauses existed.

“Equally, nowhere is there a cogent, economy-wide case made for extending and tightening what are already complex processes … the Australian government should address these points directly prior to advancing solutions in search of a problem,” a spokesperson for the body said.

Union leaders have called on the Government to investigate the claims.

CBA pays premium on bond issue

The Commonwealth Bank paid a significant premium in raising $3.5 billion in its first local auction of covered bonds.

The deal was the largest ever bond transaction carried out in Australia, and saw CBA pay 175 basis points over the swap rate, despite the bank’s robust credit rating.

This is the highest-ever spread paid by one of the nation’s big four banks since Bloomberg began collecting data in 1991, suggesting the higher wholesale funding costs affecting banks elsewhere in the world have arrived in Australia.

The Government has only recently allowed banks to sell covered notes, which typically yield lower rates of interest and are rated AAA as they are backed by a pool of mortgages.