Bodies of US pilots found in Kyrgyzstan

Two US pilots are dead and a third crew member is missing after a plane crash in Kyrgyzstan. Source: AAP

RESCUERS have recovered the bodies of two US pilots whose refuelling plane crashed in the mountains of Kyrgyzstan shortly after taking off from a base that serves as a hub for military operations in Afghanistan.

The KC-135 Stratotanker - believed to be carrying dozens of tonnes of fuel - crashed and burst into flames around 50 kilometres west of the capital Bishkek on Friday, according to US and local officials.

"The bodies of two pilots were found this morning at 7 am (1100 AEST) near the site of the crash. The search operation is continuing, the body of the third crew member has not yet been found," a spokesman for the Kyrgyzstan emergency situations ministry told AFP on Saturday.

The two bodies had been taken to the aircraft's US base, the Manas transit centre, rescue officials said.

Emergency Situations Minister Kubatbek Boronov told journalists that "the American side is establishing the identity of the dead. Staff from the Manas transit centre are at the scene. They will also investigate the cause of the air incident."

Around 50 rescuers were still searching for the third crew member, Boronov said.

The rescue operation resumed in the early morning after being called off during the night, as little hope remained of finding the crew alive after the plane broke up and burst into flames soon after taking off from the US base at Bishkek international airport.

The Manas transit centre is key to the US campaign in Afghanistan, used to ferry troops into the country, refuel warplanes and evacuate wounded soldiers.

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Arson-hit South Korean landmark reopens

SOUTH Korea has reopened its landmark Namdaemun gate to the public, five years after the historic jewel in central Seoul was burned down in an arson attack that shocked the nation.

The 600-year-old Namdaemun (South Gate), which is listed as "National Treasure Number One", has been painstakingly rebuilt at a cost of $US24 million ($A23.52 million).

The city landmark, also known as Sungryemun, was one of four gates built to protect the city when it was the capital of the Joseon Dynasty, which ruled the Korean peninsula from 1392 until the Japanese occupation in 1910.

"Sungryemun is a symbol of national spirit and identity and the face of the Republic of Korea," President Park Geun-Hye said in a speech at the opening ceremony, describing it as a "very happy moment".

"I believe the restoration of Sungryemun will not only rehabilitate our cultural heritage but also enhance our national pride and open the gate to a new era of hope," she said.

Park, wearing a traditional Hanbok robe, and other participants unveiled a large wooden tablet bearing the gate's name.

They then swung open its studded wooden door watched by guards wearing traditional clothes and carrying swords, spears, and bows and arrows.

The restoration project - one of the longest and most expensive ever undertaken in South Korea - involved more than 1,000 craftsmen who used traditional tools to restore the gate to its former splendour.

All 22,000 roof tiles were made by hand. Raw materials for decorative paints had to be imported from Japan, since Korean specialists had lost the art of making them in the traditional fashion.

Fortress walls that were destroyed during Japan's 1910-45 colonial rule were returned to their original form.

The largely wooden structure - which survived the devastation of the 1950-53 Korean War - was almost reduced to ashes by a disgruntled 69-year-old man with some paint thinner and a cigarette lighter on February 10, 2008.

He torched the gate after claiming he had received insufficient compensation following the expropriation of his land as part of an apartment-building project in Seoul's northwestern satellite city of Koyang.

Its destruction in 2008 sent shock waves through the country, with sorrowful citizens swarming around the charred ruins, laying flowers and writing grieving messages.

The arsonist was eventually sentenced to 10 years in prison.

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Aust shares flat amid profit taking

THE Australian sharemarket closed flat as investors reap profits from booming bank stocks and some worries about global growth.

The market was up 0.6 per cent for the week despite it posting losses from Wednesday onwards.

Despite some profit taking in the banks on Friday, Shaw Stockbroking senior dealer Jamie Spiteri said there was more substance in the market currently than there had been in recent years with the right stocks being rewarded.

"Liquidity has actually come back into the top-tiered sector of the market and become increasingly concentrated on those delivering reliable earnings and sustainable distributions to shareholders," he told AAP.

"The banks and financials are in the news because of their record performances in recent times and results that have come out this week, validating some of those uplifts in price."

Westpac posted an 11 per cent lift in first half net profit to $3.304 billion and announced a special dividend of 10 cents per share for shareholders, in addition to an 86 cents per share interim distribution.

Its shares fell 35 cents, or 1.03 per cent, to $33.55.

However the stock is up $7.51, or 29 per cent, for the year.

Of the other retail banks, ANZ rose 10 cents to $31.60, but NAB fell 10 cents to $33.74 and Commonwealth Bank was $1.44, or two per cent, lower at $71.06 after having traded above $73 earlier in the year.

Investment bank Macquarie Group reported a full year net profit of $851 million, up 17 per cent from the prior year and a little above market expectations.

In percentage terms, Macquarie Group rose the most of all stocks on the S&P/ASX200 on Friday, jumping 10.9 per cent, or $4.23, to $43.11.

JB Hi-Fi shares leapt up after the retailer said it expected full-year profit to increase by up to 11 per cent to between $112 million and $116 million.

Its shares closed $1.25, or 8.06 per cent higher, at $16.75.

The big miners made gains amid some commodity price rises overnight.

BHP Billiton recovered some of its losses this week closing 18 cents higher at $31.97 and Rio Tinto gained 58 cents, or 1.1 per cent, to $54.49.

KEY FACTS

* At the close on Friday, the benchmark S&P/ASX200 index was down half a point at 5,129.5 points.

* The broader All Ordinaries index was 1.3 points higher at 5,105.4 points.

* The June share price index futures contract was six points higher at 5,127 points, with 23,146 contracts traded.

* The price of gold in Sydney was $US1,475.90 per fine ounce, up $US20.60 on Wednesday's closing price of $US1,455.30.

* National turnover was 1.27 billion securities worth $4.33 billion.

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Macquarie shares up on bumper FY profit

Shares in Macquarie Group soared after the investment bank announced a rise in full year profit. Source: AAP

MACQUARIE Group shares have soared to a near three-year high after the financial firm reported a double-digit lift in net profit, boosted dividends and flagged further improvement in the year ahead.

The 17 per cent lift in full year net profit to $851 million beat market expectations of about $820 million and was above the company's own forecasts.

It was achieved on the back of improved market conditions and further cost reductions, with staff numbers falling by 539, or about four per cent, over the year.

"Global market conditions generally improved during the year to 31 March 2013 which, together with strong cost control across the group, led to the improved result," Macquarie chief executive Nicholas Moore said in a statement on Friday.

A $1.25 per share final dividend, 40 per cent franked, took dividends for the full year to $2.00, up from $1.40 in 2012.

In terms of the outlook, Macquarie said earnings in the current year should improve on fiscal 2013 provided market conditions did not deteriorate.

"We expect the year to come will be better than the year we have just had," Mr Moore told reporters.

Investors cheered the Macquarie result, sending the stock up 10.88 per cent, or $4.23, to $43.11 at the close of trade on Friday.

It was the stock's highest finish to the local session since June 2010.

Morningstar head of financials David Ellis said the lift to the dividend was a "pleasant surprise".

"We expect the stock to push higher in coming days due to a combination of consensus upgrades and an improved outlook for dividends and franking," Mr Ellis said in a research note.

Net operating income for fiscal 2013 fell four per cent to $6.7 billion.

Total operating expenses fell 10 per cent to $5.3 billion.

Macquarie Securities (MSG) reported the weakest performance, suffering a full year net loss of $50 million amid subdued market conditions.

The result was however an improvement from a net loss of $194 million in the prior year, led by improved market volumes in the fourth quarter, as well as reduced operating expenses and lower legacy costs.

Macquarie Funds, Banking and Financial Services, Macquarie Capital, and Fixed Income, Currencies and Commodities reported improved net profit for fiscal 2013, while profit was broadly in line with the prior year at Corporate and Asset Finance.

Meanwhile, Macquarie said director Catherine Livingstone, who joined the board in 2003, would not seek re-election when her term expired in July.

Also, Macquarie group head of banking and financial services Peter Maher will retire after 12 years in the role, with Greg Ward appointed as his replacement.

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New Defence white paper on the way

THE long-awaited Defence White Paper will spell out a fresh vision for Australia's defence and its response to China's rising military power in the Asia-Pacific region.

But analysts say the big issue will be funding and how much defence can expect at a time of severe federal fiscal constraint.

The 2013 Defence White Paper, due on Friday, succeeds the last paper launched four years ago by then prime minister Kevin Rudd.

His paper carried an extensive shopping list, including 12 new submarines, aircraft and warships and an ambitious funding plan before colliding with the downturn prompted by the global financial crisis.

The new White Paper is tipped to tone down some of the more controversial judgments in the 2009 document, including a warning on China's growing military power.

It's also expected to adopt more achievable funding plans, after an earlier, and unrealised, promise of three per cent real growth in defence budget spending out to 2017-18.

The 2013 paper should also update defence policy in the aftermath of the global financial crisis, the withdrawal from Afghanistan and East Timor and a strategic shift toward the Asia-Pacific region.

This will be based on Labor's over-arching National Security Strategy released in January, which pointed to the requirements post the 9/11 environment.

These included fighting cyber threats and creating better partnerships with other national and international security agencies.

But the key focus of the white paper will be new equipment and funding.

Australian Strategic Policy Institute defence budget analyst Dr Mark Thomson said the amount of money needed would depend on national aspirations.

"Hopefully the White Paper will provide a clear vision for explaining to us why we need a defence force, what it's got to do, what it's going to look like and then provide adequate funding for it," he said.

Australia Defence Association executive director Neil James noted the updated White Paper was being released a year earlier than expected and could be quickly superceded if the coalition won government later this year.

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Tokyo shares close 0.76% lower

TOKYO shares have closed 0.76 per cent lower as the yen remained strong, despite a decision by the US central bank to keep its easy money policies in place to bolster the world's biggest economy.

The benchmark Nikkei 225 index on Thursday ended down 105.31 points at 13,694.04, while the Topix index of all first-section shares fell 0.44 per cent, or 5.09 points, to 1,153.28.

"Foreign investor interest remains strong, but it has eased back without overarching buy catalysts of late," said Kenichi Hirano, market analyst at Tachibana Securities.

"So players will be looking to take profits and adjust positions based on individual corporate earnings and forecasts, more than anything else," he told Dow Jones Newswires.

Trading volume was relatively light ahead of a four-day weekend, with Japanese markets closed on Friday and Monday for holidays.

Japan's corporate earnings season then resumes with the likes of Sony, Nissan, Panasonic and Toyota reporting fiscal full-year earnings.

Weakness in the Tokyo market on Thursday came as the Dow Jones Industrial Average lost 0.94 per cent to 14,700.95 on Wednesday following weak employment and manufacturing data.

After a two-day policy meeting, the Federal Reserve kept its bond-buying program in place, and left open the door to more purchases if the US economy slows under Washington's severe budget cuts.

European Central Bank policymakers are to meet on Thursday with widespread speculation that they could cut interest rates from current record lows and also unveil new measures to kick-start stymied bank lending.

Markets were also watching the state of the Chinese economy after fresh data on Wednesday pointed to a slight slowdown in April manufacturing activity.

In Tokyo afternoon forex trade, the US dollar slipped to Y97.29 from Y97.40 in New York on Wednesday afternoon, while the euro weakened to Y128.01 from Y128.37.

A strengthening yen tends to weigh on the Japanese market as it makes the country's exporters less competitive overseas.

Toyota shares fell 1.08 per cent to Y5,490, Nissan was down 2.00 per cent to Y979, while Sony firmed 2.77 per cent to Y1,627 after it said on Wednesday that dozens of top executives would give up their annual bonus.

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Wine research gets $2.4m boost

CHALLENGES faced by the Australian wine industry such as climate change will be the focus of a new research project at the University of Adelaide.

The university will receive $2.4 million from the federal government to set up the Training Centre for Innovative Wine Production.

Professor Vladimir Jiranek says the centre will provide new knowledge, methods and technologies, as well as skilled researchers, to help the wine industry tackle its big challenges.

"The Australian wine industry is facing major challenges through climate change, water restrictions, changing consumer preferences and rising wine alcohol content," he said in a statement on Wednesday.

"This research training initiative comes at a critical time for the industry and will help in retaining the global competitiveness of Australia's wine industry."

Science and Research Minister Don Farrell says the centre's practical assistance will help winegrowers and producers to tap into new markets including Asia's growing middle class.

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$A slightly down after two-week high

THE Australian dollar is slightly lower after peaking at a two-week high, following the release of weak Chinese and Australian manufacturing data.

At 1700 AEST on Wednesday, the local unit was trading at 103.54 US cents, down from 103.58 on Tuesday.

The currency rose to 103.86 US cents just after midnight on Wednesday, its highest level since April 17.

The Australian dollar's overnight gain was helped by a rise in US stocks on the back of solid US housing and consumer confidence figures.

Australian Industry Group data showed the manufacturing sector recorded its 15th consecutive monthly slowing in activity and largest slowdown since May 2009.

Also on Wednesday, the Purchasing Manager's Index (PMI) showed the pace of manufacturing activity in China slowed slightly in April,

Forex.com research analyst Chris Tedder said the Chinese figures did not appear to have worried the market too much.

"On the whole, the figures aren't disastrous by any means, but may weigh on sentiment if we continue to see disappointing data out of China," he said.

"The reaction to today's PMI data was limited, largely because there is a bank holiday in China and the headline figure was only just below market consensus."

On Wednesday night, markets will be focused on the outcome of a meeting of the policy-making committee of the US Federal Reserve.

The Fed is expected to maintain its economic stimulus program of buying government bonds from banks to encourage them to lend.

The European Central Bank meets on Thursday night and is expected to cut its interest rate or, at least, signal there will be a reduction in June.

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Bigger budget deficit doesn't worry IMF

Prime Minister Julia Gillard is set to announce a $12 billion shortfall in tax revenues for 2012/13. Source: AAP

THE International Monetary Fund (IMF) isn't overly concerned about Australia's weaker fiscal position, after Prime Minister Julia Gillard warned of an even greater shortfall in government revenue.

Ms Gillard told a conference on Monday that revenue in 2012/13 would be $12 billion less than forecast because of the continued strength of the Australian dollar.

"The persistent high dollar, as well as squeezing exporting jobs, also squeezes the profits of exporting firms. With lower profits for these companies comes lower company tax going to government," she told the Per Capita forum in Canberra.

She said the government wouldn't cut the budget to the bone in response, but warned that every "reasonable" option was now on the table, "even options previously taken off the table".

As Finance Minister Penny Wong told ABC radio Australia was facing "a new economic reality", Opposition Leader Tony Abbott accused Labor of just making excuses.

Shadow treasurer Joe Hockey said the government would still be receiving $25 billion or 7.6 per cent more revenue than in 2011/12.

But the IMF said while Australia's fiscal position was now weaker than expected, it was not a concern because of the country's low level of debt.

IMF director for Asia and the Pacific Anoop Singh said with debt levels at just 10 per cent of gross domestic product (GDP), Australia was one of very few countries with triple-A sovereign debt ratings from the three major credit ratings agencies.

"The next budget will lay out the government's plan to achieve a strong fiscal position ... essentially the government has remained keen to return the budget to surplus, and this is a praiseworthy objective that we have supported," he told a news conference in Singapore.

As well, the IMF's Regional Economic Outlook for Asia and the Pacific, released on Monday, said the Australian economy should return to trend growth in 2014, despite the damage being caused by a high Australian dollar.

But Australian Industry Group chief executive Innes Willox said the erosion of the budget bottom line should be seen in the context of declining business activity and a slowing economy.

"The major parties should avoid plans for tax increases or spending cuts that would worsen the outlook for this already slowing economy," he said in a statement.

TD Securities head of Asia Pacific research Annette Beacher has upgraded her forecast for the 2012/13 budget deficit.

It's now seen closer to $25 billion - or 1.7 per cent of GDP - compared to an earlier prediction for a $10-$15 billion shortfall.

"Clearly revenues rely too heavily on corporate taxation and not enough on personal taxation, a legacy of the prior Howard-Costello government," she said in a note to clients.

"This structure needs to change."

However, even a $25 billion deficit would be a marked improvement on the $43.7 billion deficit posted in 2011/12 and the $47.7 billion deficit in 2010/11.

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Cyclone watch issued for far north Qld

A CYCLONE watch has been issued for far north Queensland, on the day that a third of the state was placed under drought declarations.

The weather bureau says communities between Thursday Island and Cooktown have been put on alert for gale force winds on Wednesday.

The bureau says a deepening tropical low in the Coral Sea is expected to make landfall near Lockhart River around midday on Wednesday as a category one or very low-grade category two cyclone.

On Monday evening, the system was 1000 kilometres east of Lockhart River and 890 kilometres northeast of Cairns and moving towards the coast at six kilometres an hour.

Heavy rain and flash flooding has been forecast for far north Queensland from late Tuesday.

Earlier on Monday, the state government declared 13 shires, covering a third of the state, as drought-affected.

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