Australian stocks stocks advanced, paring the benchmark index’s worst annual drop on record, as higher metals prices boosted commodities companies. BHP Billiton Ltd., the world’s biggest mining company, gained 2.7 percent, after nickel climbed the most in two months in London. It is the stock’s fourth-straight advance ahead of the year end. Rio Tinto Group, the world’s third-largest mining company, added 2.6 percent. “Mining stocks were pushed down this year as investors realized the world was going to be dragged into some sort of recession,” said Shane Oliver, head of investment strategy at AMP Capital Investors, which manages $61 billion in Sydney. “There’s a bit of cautious optimism the new year might bring something better. Growth should pick up through the second half of 2009.” The S&P/ASX 200 Index rose 1.9 percent to 3,722.30 at the close of trading in Sydney, advancing for its fourth day and paring the year’s loss to 41 percent. The annual decline was the biggest in the index’s history, which dates back to 1992. The All Ordinaries Index, which goes back to 1980, added 1.9 percent, cutting its 2008 drop to 43 percent. The market closed at 2 p.m. today, two hours early. Both measures registered record declines as the global credit crisis tipped the world’s biggest economies into recession, crimping demand for Australia’s commodity exports. Bank earnings have been hurt by credit-related losses that have swelled to more than $1 trillion worldwide. Minara Resources BHP rose 2.7 percent to A$30.44, while Rio Tinto surged 2.6 percent to A$38. Separately, Rio sold its stake in an aluminum smelter joint venture in China to a partner to help reduce debt. Qingtongxia Aluminium Co. will buy Rio Tinto’s 50 percent stake in the venture, said Jim Singer, an Australia-based spokesman for London-based Rio Tinto. Minara Resources Ltd., the Australian nickel producer controlled by Glencore International AG, jumped 3.6 percent to 28.5 cents. Nickel surged 10 percent on the London Metal Exchange, the most since Oct. 29. Zinc rose 1.2 percent and copper 0.3 percent. Atlas Iron Ltd. soared 10 percent to 85.5 cents after saying it discovered more iron ore deposits at its wholly owned Abydos project in Western Australia. New Zealand’s benchmark NZX 50 Index gained 37.49, or 1.4 percent, to 2,715.71, the most since Dec. 3. Air New Zealand Ltd., the nation’s biggest airline, was the index’s best performer today, rallying 7.9 percent to 96 New Zealand cents after saying tests proved the commercial viability of jatropha oil as an alternative fuel. Worst Performers The worst-performing stock on the S&P/ASX 200 this year was Babcock & Brown Ltd., a debt-laden asset manager struggling to stave off collapse, which tumbled more than 99 percent. HFA Holdings Ltd. was close behind, plunging 97 percent as the hedge-fund manager faced a rout in global markets. Valad Property Group, an Australian real-estate investment trust, sank 96 percent following asset writedowns, and after a customer went into receivership. Commonwealth Bank of Australia fared the worst among banking stocks, losing 51 percent in the year. The index’s best performers were Linc Energy Ltd., a developer of clean-fuel projects, which soared 163 percent in 2008, and Origin Energy Ltd., which surged 85 percent, boosted by the sale of half its coal-seam gas unit to ConocoPhillips for as much as $8 billion. All 10 industry groups tracked by the index declined. The worst-performing one was consumer discretionary, slumping 56 percent as interest rates peaked at a 12-year high in March, damping consumer spending. Industrial stocks were close behind, followed by financial companies and materials stocks. Health related stocks fell 11 percent, the least among the groups. More than half the stocks on the benchmark index lost more than 50 percent in 2008.

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