3:00AM New York, 7:00PM Sydney – The RBA kept its key rate at 7.5% but noted of the rising inflationary pressures in the economy.

Market Sentiments

ASX 200 index fell 1.5% or 76.4 to close at 5,138.90. The preliminary market turnover was 1.72 billion shares worth $5.29 billion, with 602 stocks up, 567 down and 299 unchanged. The most traded stock was Cluff Resources, with 129.88 million shares worth $2.65 million.

Rio Tinto Doubles Iron Ore Prices

The world''s second largest iron ore exporter, Rio Tinto and its customers in Asia have settled on a 96.5% increase iron ore lump prices of and 80% increase for fine ore prices for all deliveries beginning April 1 of this year. Japanese and South Korean manufacturers agreed to a price increase, earlier reached with Chinese steel customers.

Sam Walsh, chief executive of Rio Tinto''s Iron Ore group, said: ""These agreements are a strong endorsement of the settlement reached last week and reflect the very strong demand for our products across the world''s fastest growing markets"".

Rio Tinto hopes to increase production to 320 million tons by 2012 and 420 million a year after that.

Rio Tinto share rose 1.5% and rival miner BHP Billiton which is still in discussion with its customers rose 1.6%.

Reserve Bank Maintains Rates

The Reserve Bank of Australia today decided to maintain official interest rates at 7.25% for another month. The central bank raised interest rate 25 basis points in March and by the same amount in February of this year.

In a statement, central bank Governor Glenn Stevens said inflation in Australia had been high over the past year in an environment of limited spare capacity and strong growth in demand.

Consumer Price Index for the twelve months ending in March was at 4.2% but is expected to increase on a sharp gain in food and energy prices.

""In these circumstances, the Board has been seeking to restrain demand in order to reduce inflation over time. As a result of earlier decisions by the Board, additional rises in market interest rates and tougher credit standards for some borrowers, there has been a substantial tightening in financial conditions since the middle of last year,"" he said.

The governor also noted credit concerns resurfacing in international financial markets and rising oil prices, which it said, was likely to boost inflation. The central bank however also noted that the rising price of fuel is restraining demand in the economy moderating economic growth this year.

Gainers & Losers

Of the ASX 200 index stocks, Connecteast Group led the gainers with a rise of 11.1% followed by increases in Babcock & Brown of 7.8%, in Resmed Inc of 6.9%, Murchison Metals in of 6.8% and in Qantas Airways of 6.6%.

Of the index stocks, ABC Learning led the decliners with a fall of 15.5% followed by losses in Goodman Group of 9.4%, in Valad Property of 7.5%, in Suncorp Metway Limited of 8.7% and in Incitec Pivot of 6.5%.

Allco Gets Loan Extension

Troubled fund manager, Allco Finance Group has been granted further reprieve by its lenders who agreed to extend its debt repayment deadline.

Allco disclosed today in a statement that its senior banks had extended the deadline for its $250 million bridge facility and the review period till the end of this month.

The company claims that it is on course to meet its debt repayment schedule that targets lowering its senior debt to $400 million by September 2009.

The financial group agreed to pay additional $31.2 million to banks yesterday from the proceeds of completed asset sales, including a portfolio of European wind farms, bringing the total repayments to $177.1 million in the last three months.