3:00AM New York, 7:00PM Sydney - ASX 200 index fell 1.8% as financial and resource stocks led the decline. Virgin Blue plunges 22% to a new low.

Market Sentiments

ASX 200 index fell 1.8% or 96.9 to close at 5,342.40.

Market Driver

Australia and New Zealand bank''s chief executive Mike Smith will lead a review of ANZ''s involvement in securities lending business and its involvement with Opes Prime Group.

Senior ANZ executives David Hisco, Managing Director Esanda and Chris Page, Head of Risk Asia Pacific will assist Smith and David Crawford, one of Australia''s most experienced company directors with experience in company liquidation and restructuring.

The review, which has the endorsement and support of the ANZ Board, will examine the oversight and control of ANZ''s involvement in securities lending business and management of ANZ''s client relationships including with the Opes Prime Group.

ANZ, Merrill Lynch & Co. and Dresdner Kleinwort took A$1.59 billion of stocks from the share portfolios of now defunct Opes Prime clients last month to recoup loans to the brokerage firm.

ANZ shares have dropped 13 percent since April 7, when the bank said it set aside $975 million for bad debts, predicting rising defaults as higher interest rates curb economic growth. ANZ share fell 2.3%.

Gainers & losers

Of the ASX 200 index stocks, Pan Australia Resource Ltd led gainers with a rise of 9.3% followed by increases in Incitec Pivot LT of 4.5%, in Felix Resources of 3.5%, in AGL Energy Ltd of 3.2% and in Independence Group of 3%.

Of the ASX 200 index stocks, Toll Holdings Ltd led decliners with a fall of 15.1% followed by losses in Sino Gold Mining of 12.2%, in Spotless Group of 11.5%, in Asciano Group of 9.1% and in Austar United of 8.9%.

Leighton wins $344 million contract

Leighton Contractors Pty Limited''s wholly owned subsidiary, HWE Mining has been awarded a $344 million contract to provide mine development services at Rio Tinto''s Mesa A iron ore operation, located 50 km from Pannawonica in Western Australia''s Pilbara region.

The project is the first major contract to be awarded by Rio Tinto to HWE Mining. It will see HWE Mining design and construct the ore handling and train loading plant, as well as associated mine infrastructure. In addition, HWE Mining will carry out pre-strip work to establish the Mesa A operation by late 2009.

On completion of the mine development program in late 2009, the Mesa A mine will be operated by Rio Tinto and is expected to produce 25 million tons of iron ore per year.

Leighton Contractors is one of Australia''s leading construction, mining, services and telecommunications groups with over $8 billion of work in hand, employing more than 7,500 people across Australia and New Zealand.

Leighton share fell 1.1%.

Kagara dismiss reports of Lounge Lizard nickel sulphide''s impending sale

Zinc explorer and miner Kagara Ltd today downplayed the media reports that it intends to sell its Lounge Lizard nickel sulphide deposits located at Forrestania in the immediate future.