Australian share prices are expected to ease further this week as investors adjust to the likelihood of the country's first interest rate rise in 15 months, dealers said. They said the market's record-breaking performance may have peaked for the moment but there are still a whole series of positive corporate and economic fundamentals that should keep stocks humming along, if not as fast as before. For the week to February 25, the SP/ASX200 index ended down 33.0 points or 0.79 percent at 4,130.5, while the broader All Ordinaries closed down 35.3 points at 4,116.4.

AMP Capital Investors head of investment strategy Shane Oliver said the Reserve Bank of Australia is widely expected to increase interest rates by 0.25 percentage points to 5.5 percent to put a lid on inflationary pressures.

He said a solid reporting season may have dampened the market slightly as investors had hoped for a repeat of the previous stellar performances.

At the same time, Australian companies' fundamentals remained sound meaning any downturn was likely to be short-term, he added. "It's clear from the latest reporting season that corporate Australia is in great shape," Oliver said.

He said his firm has tracked earnings of 255 companies reporting earnings for the six months to December and in aggregate, profits had risen 43 percent from a year earlier.

"Even if the (exceptional) profit increases of companies like BHP Billiton, Brambles and AGL are stripped out, aggregate profit growth is exceedingly healthy at 33 percent," Oliver said.

The reporting season comes to an end on Monday with results expected from Woolworths, Harvey Norman, Westfield and Australian Pipeline Trust.

The Reserve Bank board meets to discuss interest rates on Tuesday although the results of the meeting will not be released until Wednesday.

Copyright Agence France-Presse, 2005