The Aussie sharemarket closed just 0.2% higher Tuesday despite opening the day around 1% up. Most sectors managed to stay above the line, however the telecommunications sector slumped following the government’s announcement it would break up Telstra. 

In economic news, The Australian Bureau of Statistics said home starts dropped by a seasonally-adjusted 3.7% to 30,411 units in the June quarter. Forecast were for a 1% increase.

At the bell, the All Ords added 11.1 to 4,547.2, while the ASX/200 gained 9.2 to 4,540.3. Over 3.1 billion shares, or $5.9 billion had changed hands.

The Telecommunications sector slumped 3.8% on the news regarding Telstra, which include draft laws paving the way for Telstra to split and sell parts of its interest in the profitable Foxtel.

Telstra retreated 4.3%.

Heavyweight miners showed strength leading the Materials and Resources sector 0.8% higher.

BHP Billiton and Rio Tinto climbed 1.1% and 1.6% respectively. The latter said it has agreed to sell 56% of the Cable division of its Alcan Engineering Products business to Platinum Equity for an undisclosed sum.

Steelmakers Onesteel and Bluescope rallied 1.8% and 1%.

Orica put on 3.3%, while Fortescue reversed early gains to finish 0.5% lower.

Gold miners Lihir Gold and Newcrest fell 0.3% and 1.4% as the price of the precious metal dipped below the US$1,000 mark.

Macarthur Coal was up 3.7% with some analysts forecasting strong growth in that sector in the medium term.

The Energy sector was up 0.1% despite the price of crude fell below US$69 a barrel.  Woodside was flat, while its peer Santos retreated 0.3%.  Oil Search lost 1% as Origin added 0.5%.

Oilfield engineering firm WorleyParsons and ERA rose 1.3% and 1.9%.

Industrials were mixed with the sector adding 0.2% overall. Leightons shed 0.8%, while Toll edged 0.2% higher. The sectors largest stock, Brambles, added 0.9%.

CSR and Downer EDI climbed 0.5% and 1.1% respectively.

Macquarie satellites Macquarie Airports and Macquarie Infrastructure Group were up 0.4% and 0.7%.

The big four banks were mixed. ANZ and NAB added 0.4% and 0.2%, while CBA slid 0.3%. The broader Banks and Financials sector put on 0.1%.

Westpac dipped 1.2%.

Among insurers IAG and QBE put on 1.4% and 0.6%, while the remainder were relatively flat.

Investment bank Macquarie Group gained 0.9%.

Property Trusts were one of the market's better performers by the end of the day, rising 1.2%. Mirvac rose 1.9%, while GPT and Westfield added 0.8% each.

Dexus and Lend Lease climbed 4.6% and 3.4%.

Consumer Discretionary had several standout performers, leading the sector 1.6% higher.

Harvey Norman spiked 6.4%, while Austar, which stands to benefit from a break-up of Telstra, rose 4.6%. Billabong and JB Hi-Fi added 1.5% and 2.7%.

Consolidated Media rose 2%, while Newscorp and Fairfax were trading 2.5% and 1.3% above the line.

Consumer Staples put on 0.2%. Wesfarmers rose 0.3%, while rival Woolworths was flat.

Coca-Cola Amatil advanced 1.9%, while Foster’s shed 0.7%.

The Healthcare sector gained 0.6%. CSL advanced 0.2%, while Primary Health Care rose 1.9%.

Around the region, the Nikkei 225 rose 15.6 to 10,217.6, the Straits Times Index added 15.8 to 2,655.5 and NZSE50 lost 29.0 to 3,099.6. The Hang Seng was closed until 14.30 local time due to a typhoon warning.

Spot gold was trading at US$998.01 per ounce and the Aussie was buying US$0.8625.

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Telstra responds to reform package
Telstra Corporation CEO, David Thodey, said the company was committed to working with the Federal Government in response to the proposed regulatory reform package. Mr Thodey said the company was disappointed the Government had felt it necessary to introduce the legislation.

At the final whistle, Telstra shares were down 14c to $3.11.

Telstra faces government reforms
Telstra Corporation shares lost ground Tuesday morning as Senator Stephen Conroy announced historic reforms to the telecommunications industry. The Minister for Broadband, Communications and the Digital Economy said the reforms would drive future growth, productivity and innovation across all sectors of the economy.  

Chevron awards contract to KJVG
Clough announced that the Kellogg Joint Venture Group, of which it forms part of, has been awarded an estimated $2.7bn contract by Chevron Australia. The engineering and construction company said the contract is to engineer, procure and construction manage (EPCM) the LNG downstream and logistics portion of the multi-billion dollar Chevron-operated Gorgon LNG Project.

At the end of the day, Clough shares were down 2c to 95c.

Rio to divest 56% of Alcan's Cable division
Rio Tinto said it has agreed to sell 56% of the Cable division of its Alcan Engineering Products business to Platinum Equity. The mining giant said Rio Tinto Alcan would remain a key supplier of aluminium rod and molten aluminium to Cable’s plants in North America.

At the finish, Rio Tinto shares were up 93c to $58.98.