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Rio Tinto Limited (RIO) expects economy wide inventory rebuilding in the OECD to provide a short-term boost to activity. The mining giant’s comments followed the IMF’s predictions of global growth of almost 4% and Chinese GDP growth of between 9% and 10%.

"Such growth acceleration would have positive implications for metals and minerals markets," Rio said.

"Although it is still unclear whether a sustainable recovery in private sector confidence and economic activity will emerge as the fiscal and monetary stimulus wanes or is removed over time."

The company pointed to risks to the outlook including the possibility of an aggressive tightening of monetary policies in Asian economies in response to concerns about consumer and/or asset price inflation. This point appears particularly significant considering the current concerns the market has at the moment in regards to the possible tightening of China’s monetary policy.

Rio said it is also possible that consumer spending in the OECD would remain constrained due to concerns about employment prospects, housing wealth and increased tax burdens.

"Economic data releases and news flow will affect investors’ perceptions about the likelihood of such risks compared with the strength of the more positive forces on the markets," the company said.

"This will lead to negative and positive swings in sentiment affecting commodity prices through speculation."

In Rio’s 2009 Annual Report CEO, Tom Albanese, said while the company recognises major short term uncertainties remain, the outlook for Rio’s industry is attractive long term given continued growth and urbanisation of the developing world.

"The exponential growth of China’s demand for iron ore, copper, coal and aluminium is expected to continue over the next 15 years, as the average wealth of many millions of people increases," Mr Albanese said.

"Their consumption of raw materials will rise accordingly. As China nears the top of the commodity intensity usage curve, India is expected to follow, supporting a further potential wave of strong commodity demand."

While acknowledging 2009 marked a positive turning point for the company, Mr Albanese said major challenges remain.

"The Tier 1 deposits that are the focus of our strategy are becoming harder to find and more technologically difficult to develop," he said.

"There are pressures in countries well endowed with minerals for governments to gain a greater proportion of resource rents."

Looking at the proposed partnership with Chinalco chairman, Jan du Plessis, said that while the board considered it both strategically and financially attractive, the proposition was nevertheless highly controversial.

"It became clear to me that many shareholders had considerable misgivings about the proposed transaction," Mr du Plessis said referring to his meetings with a large number of shareholder groups.

"These concerns related not only to the financial terms of the transaction, but there were high levels of discomfort about the structure of our relationship with Chinalco."

He added that the company deeply regretted the loss of the opportunity to establish a strategic partnership that would have fundamentally changed Rio’s relationship with its largest customer base.

"We will continue to work towards extending our relationship with Chinalco and to pursue business opportunities that may be to our mutual benefit."

Mr du Plessis said some of the pressure was relieved by the proposed production joint venture with BHP Billiton in relation to the two company’s respective iron ore assets in Western Australia.

"The joint venture will allow us to capture the enormous long term synergy benefi ts that would result from the integration of our production facilities," Mr du Plessis said.

"The value that could be captured has been estimated to be at least US$10 billion."

As at 1036 AEDT, Rio shares were up 47c to $75.85.

Aussie pharmaceutical company, Acrux Limited (ACR) said it had entered an agreement with US giant Eli Lilly to commercialise its male testosterone replacement drug, AXIRON. Under the terms of the deal, Acrux said it was in line to receive up to US$335 million in milestone payments, plus royalties on worldwide sales.

The agreement remains subject to US FDA approval of the drug, however Acrux’s chairman Ross Dobinson was upbeat on the company’s prospects.

“Acrux was founded as a spin-off from Monash University a decade ago, and can now anticipate profitability, dividends and a suite of products in global pharmaceutical markets’’ Mr Dobinson said.

In detail, for the rights, Acrux said it would receive an upfront payment of US$50 million, plus US$3 million for manufacturing assets. A further US$195 million is possible from royalty and milestone payments.

From this result, Acrux is forecasting a maiden profit after tax for the year ended 30 June 2010 of between $44 million and $48 million.

The pharmaceutical company also said that it was hoping to pay its maiden dividend this year.

At 1031 AEDT, Acrux shares were up a modest 4c to $2.42.

The board of Liquefied Natural Gas Limited (LNG) said that it has extended and modified its previously announced Heads of Agreement for the sale of the Fisherman's Landing project to Arrow Energy. LNG said the redrawn agreement came at the request of Arrow Energy, while the takeover offer and other uncertainties around ownership of the company play out.

As reported last week, Arrow has received a US$3.3 billion joint takeover offer from Royal Dutch Shell and PetroChina for $4.45 per share, plus a share in a new entity comprised of Arrow’s international business.

LNG and Arrow have hastily updated their Heads of Agreement on the sale of the Gladstone LNG project to now be a non-exclusive arrangement, allowing Gladstone LNG to meet with other shareholders, while the Heads of Agreement can be terminated by either party, provided one day’s written notice is given.

If either side pulls out of the deal there would be no penalty to the other side.

At the close Monday, Arrow shares were trading at $5.25 per share, while LNG shares were trading at 51c.

Telstra Corporation Limited (TLS) announced the completion of a 10-year benchmark €1 billion Eurobond issue, with a 4.25% annual coupon and a maturity of 23 March 2020. The company said the bond was about six times oversubscribed with an order book comprising almost 300 individual orders from a wide range of high quality fixed income investors, including fund managers, insurance companies and banks.

Telstra said issue proceeds would be used mainly for retiring shorter-term bank debt and for general working capital purposes.

Chief financial officer, John Stanhope, said the Eurobond issue represents Telstra’s successful return to the debt capital markets after a period of absence following the global financial crisis.

“It demonstrates the investor interest in Telstra's solid credit and business fundamentals as Australia’s largest telecommunications service provider,” Mr Stanhope said.

“The offering achieved pricing at the tight end of market guidance and reflects the improving market sentiment and investor demand in the Euro market, and the excellent work by the joint lead managers.”

Mr Stanhope added that the successful bond issue, which would provide Telstra with around $1.5 billion of cost effective long-term funding and help to lengthen the average maturity of Telstra's debt portfolio.

At the close of trade yesterday, Telstra shares were trading at $3.04.

Catalpa Resources Limited (CAH) this morning announced that it would undertake a $20 million capital raising to pay down $10 million worth of debt, with the extra funds being used to accelerate resource definition and exploration drilling at the company’s Edna May Gold Project. The money would come via a $1.32 institutional placement at $1.32 per share to raise $10 million, and an entitlement offer to raise another $10 million at $1.25 per share.

Telecom Corporation of New Zealand Limited (TEL) said the government’s rural broadband plans that were originally set out in September 2009 would adversely impact the company’s EBITDA guidance for each of the 2011, 2012 and 2013 financial years by up to $56 million if they are enacted.

Seven Network Limited (SEV) shares were placed in trading halt in connection with proposed announcements of scheme booklets associated with its proposed schemes of arrangement. The company said the Federal Court considered the transaction this morning and that the information read out during the court hearing is materially price sensitive to Seven shares and TELYS3. Seven said its shares should not be permitted to trade until the market has the benefit of all the information in the scheme booklets. The company said it expects the halt to be to lifted upon the release of the scheme booklets to ASX by approximately 2pm today.

Following the broker’s recent GDP forecast upgrade, Goldman Sachs JBWere has raised its earnings estimates for UGL (BUY, price target $18.54) and lifted its recommendation on the stock. The broker said UGL is set to benefit from higher than expected economic growth and capex spend.

Goldman Sachs says that its forecast 22% growth in FY11 EPS and NPAT looks increasingly achievable and the growth moves past one-off negatives in FY10.

The broker is also attracted to UGL on a relative valuation basis, with a forecast FY11 PE of 12.8x, a discount to the ASX 200 Industrials. Moreover, given the macro economic tailwinds, Goldman Sachs argues that the stock should justifiably trade at a premium.

In terms of a re-rating catalyst, the broker expects a reasonable number of contract wins in the coming months in argues including resources, rail and infrastructure.

UBS upgrades ALS to BUY with a price target $3.80.

UBS downgrades AWE to NEUTRAL with a price target of $2.92.

Wall Street recovered losses in afternoon trade as the Dow and S&P 500 eventually closed in the black. However, Google led the Nasdaq to fall off its 18-month highs. 

Moody’s comments that the US and the UK are closer to losing their AAA credit ratings weighed on investor’s minds.

In economic news, industrial production increased 0.1% in February. Forecasts were for it to remain unchanged.

Capacity utilisation rose from 72.5% the previous month to 72.7% in February, versus forecasts for an unchanged reading.

Meanwhile, the Empire manufacturing survey dropped from 24.91 in February to 22.86 in March. Forecasts were for the regional reading on manufacturing to drop to 22.

The Dow Jones added 17.46 points, or 0.16% to 10,642.15, the S&P's 500 rose 0.52 points, or 0.05%, to 1,150.51 and the NASDAQ shed 5.45 points, or 0.23%, to 2,362.21.

Senate Banking chief Christopher Dodd, released a draft bill of regulatory changes aimed at preventing another financial crisis. It is expected that it will be a challenge to get the bill passed in the Senate.

Citigroup was the worst performer in a disappointing day for major financials. Its shares were down 2%, while Wells Fargo was 0.9% on the other side of the line.

AIG added 0.3% after announcing it would withhold US$21 million in bonuses that are due to former and current staff of its Financial Products unit.

Google lost 2.8% on reports the search engine is close to closing down its Chinese operations due to stringent government monitoring.

Rival Yahoo! gained 0.9%, while elsewhere in the tech sector Apple fell 1.2% and Oracle put on 0.9%.

A broker upgrade sent Wal-Mart shares 2.8% higher. Target and Costco advanced 0.7% and 0.6%.

Boston Scientific slumped 12.6% after halting sales of its heart-shocking defibrillator implants.  

NYMEX light crude oil for April delivery fell US$1.44 to settle at US$79.80 a barrel. Exxon Mobil lost 0.8%.

COMEX gold for April delivery rose US$3.70 to US$1,1105.40 per ounce.

European Markets

European stocks lost ground as US banking reforms concerned investors. The possibility of tightening Chinese monetary policy sent miners lower.

The UK benchmark FTSE 100 shed 31.80, or 0.57% to 5,593.85. The French CAC40 weakened 36.49, or 0.93% to 3,890.91, while the German DAX lost 41.55, or 0.70% to 5,903.56.

Banks took the most points off the index. Societe Generale and Lloyds fell 2.5% and 1.5%, while insurer Prudential dipped 2.7%.

Aussie miners BHP Billiton and Rio Tinto lost 1.5% and 1.4%. Xstrata and Antofagasta dropped 3% and 3.1% as metals prices weakened due to concerns demand from China would deteriorate.

Energy stocks tracked the price of crude lower. BG Group slid 1.3%. 

Wolseley shed 3.3% as the supplier of heating and plumbing products received a broker downgrade.

Japanese Markets

The Nikkei eked out the most modest of gains Monday, however the market continued to push to new highs in its recovery. The market is sitting at seven-week highs, lifted by the exporters who gained as the yen weakened.

The Nikkei 225 tacked on just 0.72, or 0.01% to 10,751.98.

Among the banks, 153 million Mizuho Financial shares traded hands, making it the most traded stock on the index, although its share price remained flat.

Mitsubishi UFJ, the country’s largest bank, was 0.6% stronger.

Toshiba slumped 1.8%, while Hitachi was 0.9% below the line.

Shippers were the strongest gainers on the Topix, including Nippon Yusen K.K, which rose 2.6%. Mitsui O.S.K. Lines advanced 2.1%.

Kirin, which last year bought Lion Nathan, fell 1.9% on worries over consumer spending, while another consumer staple, Japan Tobacco, shed 1.7%.

Hong Kong Markets

Hong Kong markets posted their second straight session of declines on a retreating stock market on the Chinese mainland.

The Hang Seng fell 130.64, or 0.62% to 21,079.10.

In a wrap of the banks, Bank of China fell 1.8% and ICBC was down 1.2%.

HSBC lost 0.6%.

On the plus side, Li & Fung rallied 1.8%, while European focused Esprit Holdings was 1.1% above the line.

Coal producer China Shenhua Energy shares slumped 3.9% after the company recorded worse-than-expected earnings figures.

China Coal Energy, the country’s second largest producer, slipped 4.3%.

PetroChina fell 2.3%, while Cnooc shed 0.5%.

PC maker Lenovo Group lost 2.2%. The company denied a report that it may buy Citic Securities’ stake in China Securities.