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Australia shares end up 0.1 pct as miners gain, Billabong plunges

Friday, 12 Oct 2012 | 2:23 AM ET

* S&P/ASX200 index adds 3.1 points to 4,486.6

* BHP, Rio and Fortescue climb on iron ore prices

* Billabong plunges 17 pct

(Updates with detail, comment)

CANBERRA, Oct 12 (Reuters) - Australian shares edged up 0.1 percent on Friday as gains in index-heavy mining stocks helped break a two-day run of losses, but the market still ended slightly down on the week.

Global miner BHP Billiton Ltd

gained 0.9 percent to A$33.54 and major rival Rio Tinto Ltd rose 1.8 percent to A$56.40, helped by a rebound in iron ore prices.

"We thought the (mining) stocks are fairly cheap anyway and we are seeing some prospects for recovery globally, which would be good for commoditities prices," said Damien Boey, an equity strategist at Credit Suisse.

Spot iron ore prices

have climbed above $110 per tonne this week, while the Baltic Exchange's main sea freight index

indicates an increase in demand for coal and iron ore fixtures. Fortescue Metals Group Ltd

jumped 2.7 percent after it said it expected to increase its $4.5 refinancing loan to $5.0 billion.

The benchmark S&P/ASX 200 index

rose 3.1 points to 4,486.6, but remained below 14-month highs above 4,500 hit earlier this week. It lost 0.2 percent over the week.

Investors had a slightly more negative view about the Australian economy, Boey said, after employment rose by more than expected while the unemployment rate also jumped. There was also a slight increase in the participation rate, the measure of residents who are looking for work.

"After the market had a bit of time to digest this one, actually people don't know whether it's good or bad for the economy," said Boey.

"So I think that uncertainty is weighing on some of these domestic sectors."

Banks closed the session mixed. Commonwealth Bank of Australia

and Australia and New Zealand Banking Group

gain 0.2 percent, but Westpac Banking Corp

lost 0.4 percent.

Some major defensive stocks underperformed, with telecommunication giant Telstra Corp Ltd trading flat and biopharmaceutical products maker CSL Ltd shedding 1.8 percent.

Surfwear retailer Billabong International Ltd

ended

down 17 percent, having hit a record low during trade, after private equity firm TPG dropped its A$694 million ($713 million) bid.

Shares in Discovery Metals Ltd

rose 1.2 percent after it unexpectedly rejected a takeover offer led by Chinese private equity firm Cathay Fortune Corp on Thursday.

"Most investors probably think they (Cathay) will come back with a better bid," said Stan Shamu, a market strategist at IG Markets.

New Zealand's benchmark NZX 50 index

rose 0.3 percent to 3,896.7.

(Reporting by Maggie Lu Yueyang; Editing by Eric Meijer)

((maggie.luyueyang@thomsonreuters.com)(+61 2 6273 3700)(Reuters Messaging: maggie.luyueyang.thomsonreuters.com@reuters.net))

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