Australian shares fall for a fourth day as concerns about Greece's plan to hold a referendum on the euro-zone bailout fund continues to drag on sentiment.

4.44pm: Meanwhile, some opposition creeping in to Merkel and Sarkozy's overnight demand that Greece must decide if it wants to remain in the euro zone. Greece's finance minister says that euro membership can't depend on a referendum.

"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt. This achievement by the Greek people cannot depend on a referendum," Evangelos Venizelos says.

4.40pm: On the US agenda overnight: third-quarter productivity and unit-labour costs, plus factory orders for September. All small fry in comparison to Friday night's labour market numbers.

Locally, markets will be taking a close look at the RBA's quarterly monetary statement for any indication of another interest rate cut in the near future.

4.36pm: Financials led the market down today, along with energy stocks, with both sectors losing 0.6 per cent. Materials slipped 0.2 per cent, but gold stocks added 0.3 per cent.

Consumer discretionary (up 1 per cent) and consumer staples (0.2 per cent) also ooutperformed, after encouraging retail sales numbers.

4.29pm: The ASX200 collapsed 272 points, or 6.2 per cent, since last Friday's intraday high to today's intraday low. Before this selloff, the benchmark index surged 577 points, or 15 per cent, from its intraday low on October 4. Some volatility.

4.12pm: And here's the close: the benchmark S&P/ASX200 index fell another 12.7 points, or 0.3 per cent, to 4171.9, chalking up its fourth consecutive day of losses. The broader All Ords dropped 13.7 points, or 0.3 per cent, to 4237.6.

4.07pm: The major banks are focused on improving productivity and cutting costs, as revenues stagnate due to slow credit growth and financial market uncertainty, analysts say.

Commonwealth Bank's $6.9 billion cash profit in the year to June 30 takes the majors' total annual cash profit to $24.4 billion, up 12 per cent from $21.7 billion a year ago.

A significant fall in the cost of bad debts since the global financial crisis was the main driver of cash profit growth, along with a containment of costs, PricewaterhouseCoopers (PwC) banking partner Mike Codling says.

A closer look at the banks' reports show flat margins due to moderate growth in lending volumes and competition for deposits.

These factors are a consequence of low consumer and business confidence, which leads to higher rates of saving and less spending.

In addition, the bank's wealth management and insurance activities delivered lower earnings due to the falls on global markets in recent months.

3.44pm: A late-afternoon offering from our small business colleagues: For some businesses the Christmas period can be a cracker, but for others it can be a potential killer. Blogger Valerie Khoo provides some tips here on avoiding the Christmas cash flow crunch.

3.23pm: The dollar, meanwhile, is at $US1.0247.

3.20pm: Market has made a bit of a late comeback... the S&P/ASX200 is now down 13.5 points, or 0.3 per cent, to 4171.1 and the All Ordinaries is 13.9 points lower, down 0.3 per cent, to 4237.4. 

2.57pm: Covered bonds are about to hit the market in Australia, and where there's a bond there's a rating. So far it's looking good for the big banks: Moody's has assigned a provisional 'Aaa' rating to ANZ's first covered bonds, while Fitch has rated NAB's covered bond offering with also with 'AAA'.

A covered bond gives money-market investors a claim on the underlying assets, such as mortgages, if the issuing bank runs into difficulty.

2.51pm: Maquarie's global head of equity derivatives, Todd Steinberg, has resigned, Reuters says quoting two sources with direct knowledge.

The sources declined to speak about Steinberg's next move or the reason for his exit. Steinberg was appointed to the role in May last year and joined from BNP Paribas. He was based in New York.

In announcing his appointment at the time, Macquarie said he was to lead a team of 250 staff 11 offices including New York, London, Frankfurt, Cape Town, Sydney, Hong Kong, Singapore, Seoul and Mumbai.

2.35pm: Talking China: while the local market seems bogged down in the global gloom, China's stocks are up for a third day on speculation the government will accelerate measures to boost the economy.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, has climbed 31 points, or 1.2 per cent, to 2535.24, set for its highest close since September 1, while the CSI 300 Index is up 1.4 per cent to 2779.28.

''Some banks may have started to increase lending as part of the government's policy fine-tuning,'' says Li Jun, a strategist at Central China Securities Co. in Shanghai. ''We'll probably see a rebound in the money supply this month. We're likely to see an improvement in liquidity and that'll allow the rebound to continue.''

2.29pm: China, meanwhile, is not showing any strong urge to step in as the euro-zone'e white knight. Weibo, China's Twitter, is abuzz with comments that the country shouldn't throw its hard-earned currency reserves at Europe's debt mess.

Chinese President Hu Jintao took a more diplomatic approach overnight, but the bottom line in his talks with French counterpart Nicolas Sarkozy ahead of the G20 summit was similiar: Europe is respsonsible for the mess it got itself into and needs to find ways out on its own.

"It has to be depended mainly on Europe to resolve the European debt problem," Hu told Sarkozy in Cannes, according to the official Xinhua news agency. "We believe that Europe has all the wisdom and capability to resolve the debt problem."

China, a major holder of European bonds, has repeatedly called on EU leaders to put their financial houses in order while resisting pressure to bail out its debt-laden trading partners.

2.21pm: Lots of comments flooding in on Mal Maiden's opinion piece Greece must decide - now, many in favour of the referendum, others suggesting Greece be expelled from the euro zone immediately. But here's a special gem:

"This is the life of illusion
Right trouble laced with confusion
What are we doing?
Grease is the word..."

2.09pm: Back to the local market... energy stocks are among the bigger fallers with the index down 1.2 per cent. Financials are down 0.9 per cent and the industrials index is down 0.4 per cent.

1.59pm: The Greek gloom has also sent oil prices lower - also weighed down by a surging greenback. New York's main contract, light sweet crude for delivery in December, is 72 cents to $US91.79 per barrel.

Brent North Sea crude for December delivery dipped 13 cents to $US109.21. 

1.51pm: Asian stocks, meanwhile, are lower as markets the fears mount over Europe's debt crisis.

In Japan, stocks are down about 2.2 per cent and the Hong Kong market is down about 2.5 per cent.

1.38pm: The general gloom is extending to the US, with Dow futures down more than 1 per cent.  Meanwhile, at home, Bluescope Steel is among the worst performers today, off 7.1 per cent, or 5.5 cents to 72.5 cents.

1.28pm: Bit of a change of pace from our Small Business collection, and topically given the big bank results and this week's interest rate news: Keeping your lenders in the loop.

1.07pm: This news just in from BusinessDay's Ben Butler: (Read the full story here)

Clients of failed shadow broker Sonray will get up to 69 cents in the dollar if they approve a settlement deal with Saxo Bank and accounting firm HLB Mann Judd.

The proposal would see Saxo Bank, which provided Sonray's trading platform, and HLB Mann Judd, the company's auditor, tip in $38.5 million in cash and shares in return for investors agreeing not to pursue them through the courts over their losses.

1.01pm: Bit more on the currency markets, from Reuters: Australian skids more than a US cent to $US1.0215, from $US1.0336 in New York, having fallen to a two-week trough of $US1.0208.

The Aussie is down 4.5 per cent this week. It broke through major support at $1.0230, and is on its way to test $US1.020

12.49pm: Shares resuming their slide. Meanwhile, a bit more on that Groupon IPO story: Groupon IPO price seen rising. Closer to home, and on the subject of Internet IPOs, interest in Fairfax's TradeMe is looking quite strong, the AFR was reporting earlier today. Apparently, Fairfax (publisher of this website) has cancelled plans to take the marketing push to Asia.

Fairfax shares are among the better performers today, up 3 per cent early on before paring gains a bit.

12.27pm: Despite the market uncertainty, we're about to get one of the big IPOs this week, with Groupon set to begin trading as soon as tomorrow:

  • Groupon stopped taking orders for its initial public offering a day earlier than planned because of demand for the shares, said two people familiar with the sale.
  • The company planned to close the order book for stock at 4 p.m. New York time today, said the people, who declined to be identified because the matter is private. Groupon's shares are scheduled to price on Thursday and begin trading on Nov. 4.
  • The daily-deals site is seeking to raise as much as $US540 million selling 30 million shares for $US16 to $US18 apiece. The top end of the range would value Groupon at $US11.4 billion.

12.06pm: The date for your calendar, then is December 4, when Greece will hold its referendum on the eurozone package.

Here's BusinessDay's Malcolm Maiden's take on the latest news from Europe: Greece must decide - now.

We all should have realised last week that the hammering out of a second, deeper debt recapitalisation for Greece was only half the bargain. The recap comes with even tighter controls on what Greece spends, and how much it raises in taxes. It demands, in effect, a tightening of a fiscal squeeze that is crushing the Greek economy.

11.59am: We like winners and losers, of course, and behind every general number we get some of both. In retail sales terms, then, cafes, restaurants and even food purchases were up 1 per cent or more in the September quarter. (Read the fuller version here.)

The losers, though, included an 8 per cent drop in purchases (after inflation) of clothing, footwear and personal accessories, while department store sales sank 2.3 per cent.

According to RBC Capital Markets economist Michael Turner, the drop in clothing sales was the most in a quarter since the ABS began gathering the data back in 1983 (excluding the GST distortion in July 2000.)  (Apols: this blog erred in saying department store sales had just had their worst drop.)

 11.52am: Here's a view that suggests today's retail sales are better than might have been expected - which would be good for retailers as we rush towards Christmas, just over seven weeks away:

"(The sales growth) contrasts with surveys of consumer confidence, which would have pointed to much weaker spending than what we've seen. So at this stage there seems to be a bit of a disconnect between the improvement in sales and confidence, which is still quite weak,'' said Kieran Davies, chief economist at RBS.

11.47am: Stocks, meanwhile, are almost back to where they started the day. ANZ shares are about 1 per cent lower, halving their losses.

Even so, analysts are digesting what looks to have been the weakest result among the big four banks:

  • Australia's fourth-largest bank posted 4 per cent growth in second-half underlying profit, much less than two of its main rivals have reported, although for the full year ANZ still managed to add another $5.65 billion to the nation's record-high mountain of bank earnings this year.
  • But ANZ's accounts showed that rising costs and falling loan demand are crimping profit growth and making it much more difficult for local banks to keep producing record results.
  • "Expense disciplines remain an issue at a time when the environment for revenue growth remains challenging," Citigroup analyst Craig Williams said.
  • ANZ's underlying measure of profits flattered its accounts, because this stripped out the impact of weak investment markets. Taking into account its trading activities, second-half profit actually fell 2 per cent to $2.77 billion.

11.41am: As perhaps befitting a bit of a dull retail sales figures, none of the major retailers' shares got much of a kick. They're pretty mixed today, with Myer up 0.6 per cent and Harvey Norman flat. Woolies, DJs, Wesfarmers are all off (0.5 per cent to 1.5 per cent.)

11.37am: Retail trade rose in the month to a seasonally adjusted $20.912 billion, compared with an upwardly revised $20.821 billion in August, the Australian Bureau of Statistics said.

11.30am: Those retail sales figs are out. Economists' tips were spot on: up 0.4 per cent for the month, and 0.6 per cent for the September quarter. Dollar slightly up on the news...trading at $US1.0246 a few seconds ago.

11.12am: Retail sales figures are due out at the bottom of this hour. Worth taking a look at since another weak number will encourage those tipping another RBA rate cut in December. (Rates futures were earlier pricing in a one-in-four chance of 50 basis point cut next month - bit ambitious unless the eurozone breaks up.)

Anyway, economists are tipping retail sales rose 0.4 per cent in September, market three months in a row of increases.

11.03am: but back to Greece:

  • "The Greek referendum has triggered a wave of concern," said ANZ senior FX Strategist Grant Turley. "This morning we've seen quite a few comments from Sarkozy and Merkel."
  • "The tone has changed from (French President Nicholas Sarkozy and German chancellor Angela Merkel) to be a little less supportive of Greece," he said.
  • "The tone, a little bit more confrontational, has got markets a little bit nervous again," said Mr Turley.

11.00am: Those fluctuating markets aren't proving to be good for Perpetual:

  • Wealth manager Perpetual is forecasting a drop in first half underlying profit due to falling equity markets.
  • The investment firm expects underlying profit after tax of between $26 million and $31 million in the six months to December 31, managing director Chris Ryan told Perpetual's annual general meeting on Thursday.
  • That represents a drop of between 24 per cent and 37 per cent from Perpetual's underlying profit of $41 million in the same period last year.
  • Perpetual shares were down 30 cents, or 1.4 per cent, at $21.00 at 1042 AEDT

10.46am: The Aussie dollar, meanwhile, has dropped to $US1.025 on the Europe wrangling. (Thet's the lowest for the Aussie dollar since October 21.)

  • The leaders of Germany and France told Greece it would not receive another cent in European aid until it decides whether it wants to stay in the euro zone.
  • They also made clear that saving the euro was ultimately more important to them than rescuing Greece.
  • After emergency talks with Greek Prime Minister George Papandreou, German Chancellor Angela Merkel said: "We would rather achieve a stabilisation of the euro with Greece than without Greece, but this goal of stabilising the euro is more important."
  • Sarkozy hammered home the same message, telling a joint news conference with Merkel: "Our Greek friends must decide whether they want to continue the journey with us."
  • Papandreou outraged European partners and caused panic on financial markets by announcing on Monday that Greece would hold a referendum on a second bailout plan negotiated with euro zone leaders last week.

10.39am: More from the AGM scene:

  • Building materials group Boral Ltd expects its first-half profit to fall from a year earlier, but match its second-half profit of last year, followed by a stronger second half.
  • It said its building products arm has been hit by continued softness in home building.
  • It warned that the US market, where it sells clay tiles, remained tough and said it was considering closing more plants due to the continued weak outlook for US housing.
  • In August, Boral reported a net profit of $166 millionfrom continuing operations for the year to June, after a loss of $19 million a year earlier.

10.33am: Here's some news from BusinessDay's Lucy Battersby:

  • Optus's chief regulatory lobbyist has unexpectedly left the company, it announced this morning.
  • Maha Kirshnapillai was the director of government and corporate affairs and represented Optus's interest to government inquiries on the telecommunications sector and to politicians.  
  • Optus announced he had made a difficult decision to leave the company later this month for family commitments.  
  • "Optus would like to thank Maha for his contribution to the company over the past three and a half years and wishes him all the best for his new endeavours," general manager of government and corporate affairs, Clare Gill said in a statement.

10.30am: Market now lower. Europe seems to be dogging investors, with Greece's plan to hold a referendum now likely to affect when it receives more funds.

  • The International Monetary Fund board will consider the sixth tranche of Greece's loan after a Greek referendum on a new bailout plan, the head of the IMF said.
  • "As soon as the referendum is completed, and all uncertainty removed, I will make a recommendation to the IMF executive board regarding the sixth tranche of our loan to support Greece's economic program," IMF Managing Director Christine Lagarde said in a statement.
  • The IMF chief was part of talks between euro zone leaders and Greek Prime Minister George Papandreou, who surprised European leaders on Monday by calling for a referendum on Greece's bailout plan.

10.25am: Bit of action in Europe, of course, ahead of the G20 meeting and a proposed 'mini-summit' over Greece.  Meanwhile, the Opposition's not happy with an offer by the Prime Minister, Julia Gillard, for Australia to help the IMF in its bailout efforts for the region:

  • The opposition want to know how much money Australia will provide to help fund a Eurozone bailout.
  • Ms Gillard, in the French resort city of Cannes for the G20 leaders summit, says Australia is prepared to boost its contribution to the International Monetary Fund (IMF) to safeguard the global economy.
  • Opposition treasury spokesman Joe Hockey says the coalition has no problem giving more funds to the IMF, but described the prime minister's announcement as ''astonishing''.
  • ''The suggestion that we should be putting money into the IMF to bail out the Eurozone when not even the British are prepared to do so is extraordinary,'' he told reporters in Canberra .

10.22am: The overall market's rise at the opening is starting to waver.  Meanwhile, a bit more corporate news, this time from Brambles (whose shares were up more than 1 per cent in early trading):

  • Logistics group Brambles has launched an aerospace division of its CHEP pallet business.
  • CHEP Aerospace Solutions will consist of an independent network of pallets or containers for in-flight transport of cargo, baggage and mail, plus repair centres, Brambles said.
  • ''The formation of CHEP Aerospace Solutions forms part of Brambles' global strategy of expanding its containers pooling business, which commenced with the acquisition of Unitpool in August 2010,'' the company said .
  • Brambles has furthered that expansion with the purchase of specialist pallet repair and maintenance company Driessen Services for 7.5 million euro ($A10.01 million).

10.19am: Meanwhile BusinessDay's Eli Greenblat is firing in comments from Country Road's AGM today:

  • Country Road chairman Simon Susman told shareholders at the fashion company's annual meeting this morning that he expected the 2012 trading environment to remain challenging although the group was well positioned for further growth.
  • Mr Susman said Country Road was not immune to the tough conditions, characterised by rising unemployment, the global financial crisis and natural disasters with its like-for-like sales falling 10.9 per cent in 2010-11.

10.17am: News Corp's Australian shares are up more than 3 per cent - perhaps because of the positive guidance given in its earnings report.

10.14am: Big move for Photon shares - up 1 cent, or 25 per cent, to 5 cents. The company announced plans to sell its field marketing and retail agencies for $146.5 million, and should it would have an excess cssh balance of at least $15 million.

10.11am: By contrast, CBA and NAB shares are off 0.4 per cent or less. The big miners are higher, with BHP up 2 per cent, Rio up almost as much, and Fortescue up 0.8 per cent - so no fall out from the UBS iron ore price change yet.

10.09am: Not all the market's trading yet, but the financial sub-index is currently the only lower. ANZ shares are down as much as 1.7 per cent now, making them one of the worst performers among the top 200.

10.03am: In early trading, investors sent ANZ shares lower. They were recently down as much as 27 cents, or 1.3 per cent, to $20.63, with the overall market slightly higher.

9.54am: Activity in the Australian services sector, meanwhile, contracted in October as sales weakened and new orders fell, a private survey shows.

  • The Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (PSI) fell 1.5 points to 48.8 points in October.
  • A reading above 50 indicates an increase in activity.
  • Australian Industry Group (Ai Group) chief executive Heather Ridout said the weakness in the services sector reinforced the Reserve Bank of Australia's (RBA) decision to cut interest rates.

9.51am: UBS today cut its realised price forecast for iron ore sold by BHP Billiton and Rio Tinto for the December quarter to $US143 per tonne from $US166 per tonne citing an industry move to more spot pricing.

(BHP and Rio shares both rose in London overnight, with BHP up 1.9 per cent and Rio up 3.8 per cent.)

9.45am: Good morning! Once again, a bit of corporate news around today, starting with ANZ's record annual net profit of $5.36 billion. The underlying earnings were even larger, at $5.65 billion. In sum, it looks like the big four banks' cash earnings coming in at $24.3 billion.

There's also News Corp's results, which saw charges drag on the media giant's first-quarter profit. (Fairfax Media, publisher of this website, competes with News.)

And setting up today's trading is also the overnight markets news, as covered in our need2know wrap. The key elements of which are:

SPI futures up 1% to 4212
Dollar hovers at $US1.034
Wall Street rises on economy hopes
European stocks advance on Fed view
Gold rises as Europe woes spur haven hunt
Oil gains as heating oil demand increases

This blog is not intended as investment advice

BusinessDay with agencies