Aussie stocks higher; Santos extends losses

(Adds Santos; updates indexes)

SYDNEY, Oct 26 (Reuters) - Australian shares rose 0.9
percent on Friday, led by gains in resource firms such as BHP
Billiton Ltd (BHP.AX) and Woodside Petroleum Ltd (WPL.AX) on
stronger metals prices and record high oil prices.

The benchmark S&P/ASX 200 index .AXJO rose 60.4 points to
6,684.7 by 0241 GMT, after falling in the previous two
sessions.

New Zealand's benchmark NZX-50 index .NZ50 fell 0.9
percent, or 32.92 points, to 4,230.22. The top stock, Telecom
Corp of New Zealand Ltd (TEL.NZ), was down 2 percent at
NZ$4.33.

STOCKS ON THE MOVE

* Oil and gas producer Santos Ltd (STO.AX) fell 4.3 percent
to a five-week low of A$14.35, adding to a 3.9 percent drop in
the previous session after it reported weaker third-quarter
production data and narrowed its 2007 production forecast
[ID:nSYD221194].

JP Morgan downgraded its rating on the stock to underweight
from neutral with a price target of A$12.00.

0241 GMT

* Shares in Insurance Australia Group Ltd (IAG) (IAG.AX),
Australia's top car and home insurer, fell 5.1 percent to
A$4.65 after it lowered its gross written premium growth
estimates for fiscal 2008 to 7-9 percent from 10-12 percent
[ID:nSYU003370].

0139 GMT

* OneSteel Ltd (OST.AX), Australia's second-largest steel
company, gained 4.6 percent to A$6.83.

JP Morgan upgraded its rating on the stock to overweight
from neutral, saying that it saw upside risks to its earnings
forecast for OneSteel.

0139 GMT

* Billabong International Ltd (BBG.AX), an Australian
clothing retailer, fell 2.1 percent to A$15.12 after it said
fiscal 2008 earnings per share growth (EPS) would be adversely
impacted by a strong Australian dollar [ID:nSYD22266].

0111 GMT

* Coca-Cola Amatil Ltd (CCL.AX) climbed 3.4 percent to
A$10.05.

Merrill Lynch raised its price target on the firm to
A$11.50 from A$10, citing expectations of strong earnings
growth over the next few years [ID:nSYD278315].

0110 GMT

* Mining firms advanced after a sharp rise in Chinese
copper imports helped lift industrial metals prices on London,
with copper, nickel and lead prices all ending stronger
[ID:nL2584858].

The world's top miner, BHP Billiton, which is also
Australia's largest oil and gas producer, rose 1.5 percent to
A$45.39.

BHP's main rival, Rio Tinto Ltd (RIO.AX), gained 2.1
percent to A$106.60.

0045 GMT

* Energy firms rose after U.S. crude futures CLc1
extended gains to a new all-time high over $91 in early
electronic trade on Friday, bolstered by supply concerns during
the northern hemisphere winter and growing political tensions
in Middle East. Woodside Petroleum Ltd (WPL.AX) added 2
percent to A$53.68, Beach Petroleum (BPT.AX) rose 1.35 percent
to A$1.50 while Roc Oil Co. Ltd (ROC.AX) was up 2.5 percent at
A$3.75.

0044 GMT

* Brambles Ltd (BXB.AX), the world's top pallet supplier,
climbed 4.4 percent to A$14.57.

Local media reported that logistics company, Toll Holdings
(TOL.AX), was still interested in Brambles.

Sources told Reuters on Monday that ports owner Asciano Ltd
(AIO.AX), which was spun-off from Toll in June, remains in
talks with banks for up to A$16 billion ($14.5 billion) in
funding to launch a takeover bid for Brambles Ltd.

0044 GMT

* Australia and New Zealand Banking Group Ltd (ANZ.AX),
fell 0.9 percent to A$29.70, adding to a 3.7 percent drop in
the previous session following disappointing second-half
earnings [ID:nSYD146790].

Citigroup lowered its rating on ANZ to hold from buy, and
cut its price target to A$31.00 following the results.

But the other top banks were firmer, with National
Australia Bank Ltd (NAB.AX) gaining 0.7 percent to A$42.30,
Commonwealth Bank of Australia Ltd (CBA.AX) up 0.2 percent to
A$59.61, while Westpac Banking Corp (WBC.AX) gained 0.4 percent
to A$28.60.

0039 GMT

* New Zealand's biggest listed power company Contact Energy
Ltd (CEN.NZ) fell nearly 2 percent to NZ$9.06 after it said it
expected flat underlying earnings this year due to higher gas
costs and softer wholesale prices [ID:nWEL259188].

0036 GMT
($1=A$1.10)
($1=NZ$1.31)