Gold Bear

Bourse tumbles more than 3% as gold price plunge bludgeons resources

Stocks tumbled more than 3 percent yesterday as tumbling gold prices bludgeoned mining houses.

The gold mining index fell 6.27 percent after gold dropped below $600 an ounce for the first time in more than two months as investors weighed bullion's prospects in the face of lower oil prices.

That dragged the Top40 index 3.3 percent lower to 19 197.77 points, while the all share dipped 3.06 percent to 21 054.39 points.

AngloGold Ashanti fell 7.6 percent to R299.16, while heavily weighted diversified mining house BHP Billiton slumped 5.49 percent to R127.46. Harmony Gold tripped 4.14 percent lower to R91.50.

Gold Fields fell 6.97 percent to R134.90 after announcing plans to take control of the world's biggest gold deposit, South Deep, in a series of deals worth about $2.5 billion (R19 billion).

While analysts hailed the deals as a long-term boon for Gold Fields, some warned that it could hit the stock in the short term if prices for precious metals started to fall.

"If you take the view that we're on the edge of a resource downturn, then you don't want the company to gear up now," said Wayne McCurrie, a fund manager at Advantage Asset Managers.

Shares in Western Areas, which owns 50 percent of South Deep, bucked the downtrend, climbing 3.91 percent to R46.50 after Gold Fields said that as part of the deal, it would buy shares in Western Areas from JCI. It offered to buy all other outstanding shares in the firm.

Petrochemicals firm Sasol tripped 6.04 percent lower to R228.80 after oil dropped.

Financial stocks took a beating as investors fearing global inflation and interest rate hikes sold emerging market equities. Standard Bank slid 4.62 percent to R72.92, while Nedbank dropped 5.68 percent to R103.75.

- Business Report