Australian inflation came in short of expectations for a third consecutive quarter on Wednesday, boosting the case for an August interest rate cut as mining investment peaks.

The Australian Bureau of Statistics (ABS) said consumer prices rose 0.4 percent in April-June compared with the previous quarter, while they were up 2.4 percent year on year as the economy transitions away from a decade-long commodities spending boom.

Rescuers searched the seas off Indonesia's Java island Wednesday for possibly dozens of asylum-seekers missing after their Australia-bound boat sank, leaving at least three dead, with 157 saved, an official said.

Local rescue officials estimated there could have been "up to 200" passengers on the boat which was bound for Australia, while a survivor said some 250 had boarded the vessel.

The U.S. Navy said on Monday it is considering salvaging four unarmed bombs dropped by U.S. fighter jets into Australia's Great Barrier Reef Marine Park last week when a training exercise went wrong.

The two AV-8B Harrier jets launched from the amphibious assault ship USS Bonhomme Richard during joint exercises with the Australian military each jettisoned an inert, concrete-filled practice bomb and an unarmed laser-guided explosive bomb into the World Heritage-listed marine park off the coast of Queensland state on Tuesday. None exploded.

Buildings were razed as hundreds of asylum-seekers escaped detention during riots at an Australian refugee facility on Nauru, witnesses said Saturday, following the launch of a hardline immigration crackdown.

Australia announced on Friday that boatpeople will no longer be resettled in the country and all future unauthorized arrivals will be sent to poverty-stricken Papua New Guinea for permanent resettlement.

Prime Minister Kevin Rudd Friday announced that no more boatpeople will be resettled in Australia as refugees, with all unauthorized arrivals to be sent to poverty-stricken Papua New Guinea.

"From now on, any asylum-seeker who arrives in Australia by boat will have no chance of being settled in Australia as a refugee," said Rudd, unveiling his new hardline border protection policy in an election year flanked by PNG counterpart Peter O'Neill.

Four asylum-seekers died after a people-smuggling ship carrying around 150 passengers capsized off Australia's remote Christmas Island Tuesday, triggering a major rescue operation.

The Australian Customs and Border Protection Service said the vessel overturned as it was being escorted in heavy weather to the island by two navy ships, after issuing a distress call earlier in the day.

Australian authorities were scouring remote seas for survivors Saturday after a people-smuggling boat carrying 97 went down, with 88 people rescued so far and the body of a baby found.

Home Affairs Minister Jason Clare said the boat first issued a distress call in rough seas north of Christmas Island, between Australia and Indonesia, on Friday morning.

A second 'Prisoner X' was being held in top-secret conditions in the same jail where an Israeli-Australian spy took his own life in 2010, a newspaper reported on Tuesday.

Court documents cited by Haaretz newspaper said the prisoner was being held in another wing of Ayalon prison at the same time as Ben Zygier, an alleged Mossad spy whose mysterious arrest and subsequent suicide shocked Israel and Australia when news of it hit the headlines in February.

Australia and Canada warned Wednesday about fresh threats of terrorism and kidnapping in the southern Philippines, and Canberra barred its diplomats from traveling to three cities in the area.

Both urged their citizens not to travel to large parts of the Mindanao region, with the Australian government specifically barring its diplomats from the cities of Davao, Cotabato and Zamboanga.

Australia's new Treasurer Chris Bowen was Friday welcomed by business figures as he hinted at policy changes amid recession fears following an unprecedented Asia-mining boom.

Bowen, who served as assistant treasurer from late 2007 to mid- 2009 and was also minister for immigration, tertiary education and small business, was installed as treasurer on Thursday.