Unemployment steady in March: Economy Roundup

The unemployment rate has remained constant at 5.3% during March, according to the latest figures from the Australian Bureau of Statistics.

According to the data, employment increased by a seasonally adjusted 2% or 19,600 to 10,988,300, with full-time employment increasing 30,100 to 7,691,200 and part-time employment decreasing 10,600 to 3,297,100.

The number of people searching for full-time employment fell by 3,800 to 442,000 with those looking for part-time work increasing by 8,000 to 177,100. The participation rate was at 65.1%, while the aggregate of monthly hours worked decreased by 0.6% to 1,514.2 million hours.

US group Peabody Energy has requested the Takeovers Panel to force Macarthur Coal to postpone a April 12 shareholder meeting regarding its planned $832 million acquisition of Gloucester Coal.

The move comes after Macarthur rejected a $3.56 billion offer, calling it highly conditional and at an insufficient premium.

Now, Peabody has said the Macarthur board has not given shareholders enough additional information regarding the proposal, preventing them from making a balanced judgement.

“Peabody seeks an interim order that Macarthur be required to postpone the shareholders’ meeting until its application is determined,” it said.

“The failure by Macarthur to postpone the shareholders’ meeting does not permit additional disclosure to be made and to allow its shareholders to consider all information relevant to the resolution proposed.”

Arrow Energy has located a potential source of coal-seam gas in New South Wales and is determining the production potential of a project, the company has announced.

“These early test results confirm the presence of a significant gas resource located only 15 kilometres from an established gas market in Newcastle,” Arrow Australia chief executive Shaun Scott said in a statement.

The company then said it will conduct pilot testing of the area, along with exploration boreholes. Junior company Apollo Gas will be a partner in the new project.

Mirvac has announced its $350 million institutional capital raising has been oversubscribed and that it will strength the company’s balance sheet. It also said the placement will reduce pro-forma gearing by 2.5%, increase liquidity to $1.4 billion and cash on hand to $400.3 million.

“We are very pleased with the strong support our existing institutional security holders have shown for the equity raising,” managing director Nick Collishaw said in a statement.

“The institutional placement significantly strengthens the group’s balance sheet. We are now well positioned to fast track our existing commercial and residential development pipelines, and take advantage of new external opportunities in residential development and Australian investment grade real estate.”

Shares open lower on weak Wall Street, commodities

The Australian sharemarket has opened lower today on weak leads from Wall Street, dashing investors hopes the 5,000-point mark would be reached later today.

The benchmark S&P/ASX200 index was down 24 points or 0.49% to 4936.4 at 12.00 AEST, while the Australian dollar also opened lower to US92c.

ANZ shares fell 0.3% to $25.43, with Commonwealth Bank shares gaining by 0.1% to $57.54. Westpac lost 0.9% to $27.82 as NAB lost 0.8% to $27.77.

Tower Australia has said it is interested in purchasing the AIA business if it ever comes up for sale, according to the company’s chief executive.

“It is something we will look very, very closely at. It is a good quality company,” Jim Minto, managing director of Tower told Reuters. He also said he does not expect the business to come up for sale quickly.

Overseas, the pace of global growth accelerated during March at its fastest pace since July 2007, with a gain in employment for the first time in April 2008.

The Global Total Output Index, which is produced by JP Morgan, jumped to 56.6 points in March from 53.8 from February, well above the 50-point level separating expansion from contraction.

“PMI data are pointing to solid growth in the global economy,” David Hensley, a director at JP Morgan, told Reuters. “The base of the recovery also appears to be improving. Although manufacturing is still leading the upturn, the service sector is showing renewed strength,” he added.

The European Commission, the competition watchdog of the European Union, has said it has received a submission from Brazilian mining group Vale regarding its investigation of the proposed joint venture between BHP Billiton and Rio Tinto.

“We are looking at different submissions and comments and gathering facts in the context of the examination of the Rio Tinto/BHP Billiton joint venture,” Commission spokeswoman Amelia Torres said at a press conference. “Vale has made a submission to the Commission which we will now look at.”

Moody’s no longer considering DP World downgrade

Credit rating agency Moody’s has said it is no longer considering a downgrade to ratings on ports operator DP World.

“Over recent months, and most recently in the announced restructuring proposal for Dubai World, many of our concerns regarding the possible contagion of the parent company’s financial difficulties on DP World have been alleviated,” Moody’s said in a statement.

“As a result, Moody’s believes that further negative rating actions on DP World should now be contained.”

Top Federal Reserve officials in the US have warned of the risks to the economy from asset bubbles, with one suggesting higher interest rates could stop risky behaviour.

“I am confident that holding rates down at artificially low levels over extended periods encourages bubbles, because it encourages debt over equity and consumption over savings,” Kansas City Federal Reserve Bank president Thomas Hoenig told a business group.

“While we may not know where the bubble will emerge, these conditions left unchanged will invite a credit boom and, inevitably, a bust.”

Meanwhile, Fed chairman Ben Bernanke said in a speech to the Dallas Regional Chamber of Commerce that “we are far from being out of the woods”, and that “many Americans are still grappling with unemployment or foreclosure, or both”.

The comments weren’t received well on Wall Street, where the Dow Jones Industrial Average dropped 72.47 points or 0.66% to 10,897.52.