3:00 AM New York, 7:00 PM Sydney – Stocks in Australia closed higher but the worries of global economic recovery remained. Australia removes guarantee scheme for large deposits. BT Investment accepts a revised offer from PEP.

Australian stocks rose marginally after Treasury Secretary Wayne Swan announced that the country will scrap its guarantee scheme on large deposits on March 31 as the economy strengthens.

However, gains were pared after JB Hi-Fi chief executive Richard Uechtritz said he will step down in August.

Global investors speculated that smaller nations in the EU may not be able to implement budget cuts and will need a bailout to prevent widening contagion in the region.

In Sydney trading ASX 200 Index increased 0.2% or 7.3 to 4,521.40.

Of the ASX 200 index stocks, 76 gained, 110 fell, and 14 were unchanged. Ten Network led gainers in the index shares with a rise of 9.6% followed by Eldorado Gold-CDI climbing 5.1%.

The Australian dollar fell 0.9% to 86.62 U.S. cents.

Australia Removes Guarantee Scheme for Large Deposits

Australian Treasurer Wayne Swan yesterday announced that the government acting on advice of the Council of Financial Regulators will withdraw its Guarantee Scheme for Large Deposits on March 31, 2010.

However, the Financial Claims Scheme, which guarantee’s deposits of up to A$1 million, will be retained until the cap is reviewed in October 2011.

Australian banks have so far paid around A$1.1 billion for the use of the guarantee and will pay around A$5.5 billion over its full life.

The report also notes that the guarantee allowed non-major Australian banks to raise over $32 billion in funding from international credit markets.

Council of Financial Regulators- consisting of heads of the Reserve Bank, Treasury, ASIC and APRA- noted that bank funding conditions have improved such that the guarantee is no longer necessary.

“Without the Guarantee, our banks would have lent less ands interest rates for borrowers would have been higher, leading to lower growth and higher unemployment,” said Swan.

BT Takes Up PEP’ Revised Offer

The Australian reported today that Pacific Equity Partners has received 75% of Energy Developments shares after its third largest shareholder BT Investment accepted the higher PEP’s offer.

PEP controlled Greenspark Holdings increased its bid by a cent to the final price of A$2.76.

The bid is conditional on the bidder getting to the 90% threshold, after which it has compulsory purchase powers over the balance.

According to the report, BT Investment has sold a significant portion of its 7.8% interest into the offer.

PEP will terminate its offer beyond February 16.