ASX gives up early gains as oil price rise short-lived

Australian stocks retreated today, giving up solid early gains after Chinese stocks fell and oil prices lost steam.

The All Ordinaries index lost a third of a per cent to close at 5,039 and the ASX 200 index fell by 0.4 per cent to 4,980.

Mining stocks were among the few to rise after oil prices rallied overnight but the gains for oil were short-lived, with prices slipping in Asian trade.

Australia's biggest mining company BHP Billiton rose by 2.6 per cent to $17.63 after slashing its dividend and posting a $7.8 billion half year loss.

The mining giant axed its progressive dividend policy and will instead pay a minimum 50 per cent of underlying profits to shareholders.

BHP said it expected weaker prices and higher volatility would continue.

Elsewhere in the sector, Rio Tinto gained 1.4 per cent to $44.62.

Qantas shares tumbled 5 per cent to $3.79 despite more than doubling its profit for the first half of the year to a record $688 million.

The company has benefited across the board from falls in the price of fuel, which saved it almost $450 million over the same period last year.

International earnings were four times the amount for the first half of 2015, and the airline plans to add flights on Asian and North American routes.

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Fuel company Caltex saw full-year profits surge, helped by the lower Australian dollar and a major restructure that saw it close its Kurnell refinery in Sydney.

The company has made a net profit after tax of $522 million for 2015, up from $20 million the year before.

Shareholders will get a bigger full-year dividend of $1.17 a share, fully franked.

Despite the gains, Caltex shares lost 1.1 per cent to $35.34.

The big four banks all retreated, with Westpac faring the worst, down 1.5 per cent to $29.65.

QBE fared the best in the sector, jumping 8.5 per cent to $11.27 after reporting a slight fall in full-year profit, hit by a higher US dollar and what it is calling "challenging insurance pricing".

QBE said its net profit last year fell by 7 per cent to $US687 million, down from $US742 million the year before.

The dollar was boosted by more gains from iron ore prices, touching a nine-month high against the pound after London mayor Boris Johnson backed a British exit from the European Union, sending the sterling into freefall.

At 5pm AEDT the dollar was buying 50.2 British pence, 72.3 US cents, 65.5 euro cents and 81.2 Japanese yen.

Spot gold was buying $US1,219 an ounce and oil was lower after a big jump overnight, with Brent crude fetching $US34.03 a barrel.

Source: ABC News

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