Aussie shares seen making first annual loss in 6 years

By Geraldine Chua

SYDNEY (Reuters) - Australian share prices are expected to end the year in deficit, the first year of decline in six years on fears that a likely U.S. recession will drag down the rest of the world with it, a Reuters poll of analysts showed.

The share market, which is down by about a fifth already this year, is likely to languish until at least mid-year, they said, as broader financial markets grapple with the after-effects from a seizing up in credit markets.

The S&P/ASX 200 index is forecast to end 2008 at 6,100 points, down a little less than 4 percent and registering its first yearly loss since 2002, according to the median forecast given by 14 analysts polled last week by Reuters.

That follows an 11.8 percent rise in 2007.

The latest forecast is more than 14 percent lower than the forecast of 7,125 points that strategists had predicted in the December Reuters quarterly poll.

The forecasts were taken March 10-14, before JPMorgan Chase moved to buy Bear Stearns at the weekend in a firesale, sending shockwaves through financial markets and sending many equity indexes tumbling.

"There is no such thing as a U.S. slowdown without a global slowdown," said Adnan Kucukalic, equity strategist at Credit Suisse.

"The economic environment is going to get worse until maybe July and probably from there the U.S. Fed cuts will start working. At the moment things do not look good."