Global shares down after Korean attacks worry markets, Construction sector struggles: Economy Roundup

The Australian sharemarket has opened lower this morning following a drop in overseas markets, as investors remain nervous following the artillery strikes between North and South Korea that killed two marines and wounded civilians.

The attacks have drawn criticism from the United States, Australia and China, with the latter urging peace.

“We both share a view that such conflict is very undesirable, and I expressed to them the desire that restraint be exercised on all sides and I think we agree on that,” US envoy Stephen Bosworth said in a news conference.

The attack was so severe that South Korea put its military on heightened alert and scrambled jets.

The benchmark S&P/ASX200 index was down 16 points or 0.36% to 4572.1 at 12.15 AEST, while the Australian dollar lost ground overnight to US97c.

ANZ shares have lost 0.9% to $22.15, as Commonwealth Bank shares dropped 0.2% to $48.09. NAB lost 1.3% to $23.26 as Westpac fell 0.6% to $21.18.

In the United States, stocks fell as investors grew more nervous over the instability in Korea, especially as the South warned it may bring “enormous retaliation” if the shelling continues. The Dow Jones Industrial Average fell 170 points or 1.52% to 11,008.63.

Fairfax chief executive Brian McCarthy has said that constructing paywalls around the company’s sites may not be the best strategy for driving revenue.

“Just to put paywalls up, I don’t think necessarily is the answer today where you have just news sites,” McCarthy said at an investor briefing.

“I know there’s others around the world that are fiddling. We are all fiddling here. No one has the answers. There is no business model to copy.”

However, McCarthy said paywalls are a definite for mobile devices and apps.

“With mobile devices there is no doubt we will monetise at every opportunity where we can,” McCarthy said. “And that is the approach we are taking with the tablets, or iPads.”

The comments come as Fairfax has announced a new company structure, which will see it combine flagship titles into one business division.

The warning also comes as News Corp chief executive Rupert Murdoch has said he intends to start putting up paywalls around most of its content in the United States, Britain and Australia.

Construction work falls 2.1% in September quarter

Meanwhile, new data from the Australian Bureau of Statistics shows the value of construction work fell by 2.1% to a seasonally adjusted $41.37 billion during the September quarter.

The adjusted estimate for total building work done fell by 2.7% to $21.7 billion, while the total estimate for engineering work done fell by 1.4% to $19.6 billion.

In Canberra, the six crossbenchers have said they will all support the banking reform bill, first proposed by the Greens. The bill will seek to abolish exit fees and introduce mortgages based on the cost of lending.

Independent MP Tony Crook said there was a “real opportunity here to deliver some real benefit” to Australians.

In Perth, WA premier Colin Barnett has said treasury secretary Ken Henry is overstepping his boundaries by threatening states with penalties over mining royalties. Henry made the comments last week when appearing before a Senate committee.

“I am appalled that an under-treasurer at a commonwealth level would threaten the states with political action, essentially financial threats, over mining royalties,” he told Reuters. “That’s totally inappropriate.”

Meanwhile, Australia and Japan will hold new talks regarding a free trade pact, trade minister Craig Emerson has announced.

“We have agreed to re-energise the FTA negotiations, with the next round in January,” Emerson told the parliament. “We encourage very strongly the minister and the Kan government in their efforts to open up the Japanese economy, including agriculture, to more foreign trade.”

The agreement comes after several nations agreed at the APEC summit in Japan earlier this month to pursue avenues for free trade.

Ireland to put banks up for sale

Ireland central bank chief Patrick Honohan has said the Government will put banks up for sale in order to reduce their size.

“They are for sale as far as I am concerned,” Patrick Honohan told reporters. “I have been an advocate for a number of years for small countries to have foreign owners for their banks”.

The banks have already attracted prospective buyers including Wilbur Ross, who is part of a private equity consortium led by Cardinal Asset Management.

The comments are Ireland prepares to accept a bailout from the EU and IMF, although internal politics have caused prime minister Brian Cowen to come under attack.


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