3:00AM New York, 7:00PM Sydney – Australian stocks decline as more investors in the region worry about the rising inflation from the U.S. bailout of the banks.

Australian stocks declined after two-day gain as cautious investors question the effectiveness of the U.S. bailout plan and global spread of inflation from negative interest rates and low U.S. dollar. Stocks in Australia fell despite the rise in gold and oil futures prices.

Market Sentiment

In Sydney trading ASX 200 declined 1.93% or 97 to 4,923.50.

Of the stocks in ASX 200 index, 45 rose, 147 declined, and 8 were unchanged. Sino Gold Mining led gainers after gold prices increased 5.1% to $909 an ounce yesterday.

ASIC Exempts Market Makers, Exchange-Traded Options From Ban

The Australian Securities & Investments Commission reported today on its Web site that the prohibition of naked and short selling will not apply to hedging a positions that were taken by an entity before September 22, 2008 """"as part of its business of dealing as principal in equities, options or derivatives-whether OTC or exchange-traded- to fulfill
orders received from clients or to respond to a client''s request to trade, in each case before that date.""""

The Commission has also exempted persons engaging in arbitrage transactions in relation to securities of dual listed entities.

The sales occurring from the exercise of exchange-traded options issued before or after 22 September 2008 will be exempted from the recent ban. In addition, certain covered short sales made by market makers are exempt from the prohibition relating to covered short sales.

Gainers & Losers

Sino Gold Mining led advancers in the ASX 200 index shares with a rise of 15.74% followed by rises in Babcock & Brown of 13.04%, in Timbercorp Ltd. of 11.63%, in Independence Group of 10.29%, and St Barbara Ltd. of 7.58%.

Sino Gold Mining gained after gold price increased 5.1% to $909 an ounce yesterday. Lihir Gold soared 4.53%.

Other commodity stocks also advanced as crude oil for October delivery edged up 17% to $120.92 a barrel, while crude oil for November delivery gained 6.4% to $109.37 a barrel.

Oz Minerals spiked 6.50% and Newscrest Mining surged 6.43%.

Minara Resources led decliners in the ASX 200 index shares with a fall of 11.54% followed by losses in HFA Holdings of 11.11%, in Stockland of 9.16%, in Fortescue Metals of 8.25% and Macquarie Communications of 7.94%.

Oz Minerals in Strong Financial Position

Oz Minerals Chairman Barry Cusack and Chief Executive Andrew Michelmore said in a letter to shareholders that the production levels are in lines with plans and integration of Oxiana and Zinifex business will save $30 million of annual cost savings.

According to the company, it has the financial capability to finance pipeline projects """"without being beholden to financial markets"""".