The Australian share market opened marginally higher this morning despite a drop on Wall Street on Monday.

However, early gains were soon lost and at noon the S&P/ASX200 index was down 29 points, while the All Ordinaries fell 24.

US stocks fell on Monday on fears that Bank of America will renegotiate its deal to buy troubled mortgage lender Countrywide, or abandon the deal altogether. News that Microsoft is to ditch its $50 billion US takeover of Yahoo added further gloom to the market.

At Monday’s close, the Dow Jones Industrial Average was down 88 points, while the Nasdaq Composite slipped 12.

In Asian trading today, Hong Kong’s Hang Seng was down 91 points at midday, while Japan’s market is closed for a public holiday.

Meanwhile back home in Australia all eyes are on the Reserve Bank, which is set to announce the outcome of this month’s board meeting on monetary policy this afternoon.

Economists expect the RBA will leave interest rates unchanged at 7.25 per cent, believing that the recent rises have succeeded in slowing the economy. However, experts warn that many of the big banks are expected to continue raising their borrowing rates independently, in response to the global credit crunch.

In equities news QBE Insurance Group said today that is to extend its takeover offer for smaller rival IAG by two weeks, with the offer now set to expire on May 19.

IAG last month rejected QBE’s $8.1 billion approach as totally inadequate. But last week IAG cut its premiums outlook for the second time this year, and QBE said today’s offer extension will give shareholders a change to digest the profit downgrade.

Finally, St George Bank announced a lower than expected half-year cash profit of $603 million this morning. The bank also cut its earnings forecast on the impact of a $20 million margin loan secured by the former MFS, and a slowing domestic economy.

The bank said it now expects EPS growth to drop to eight per cent, from its previous target of ten per cent. St George stressed though that its full year profit should comfortably beat last year's $1.16 billion and it also raised its interim dividend by six cents a share. Shares in the bank fell almost four per cent this morning.

In individual share price movements on the ASX this morning resource stocks led the market. At midday BHP Billiton was up 25 cents, Fortescue Metals gained five, Rio Tinto added $1.38, and Woodside Petroleum put on $1.33.

Banking stocks went the opposite way. At noon, ANZ was down 29 cents, Commonwealth Bank fell 84, National Australia Bank shed 51, and Westpac lost 54.

Other blue chips also lost ground. AMP was down 17 cents at noon, News Corp fell 24, Telstra slipped a cent, and Woolworths shed 47.