Reuters: Hot Stocks: Australia shares fall as banks take breather, cautious before RBA

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Australia shares fall as banks take breather, cautious before RBA May 7th 2013, 02:14 Mon May 6, 2013 10:14pm EDT (Adds details, comments, stocks on the move) SYDNEY May 7 (Reuters) - Australian shares fell 0.5 percent in later morning trade on Tuesday, dragged down by financials as investors adopted a cautious stance ahead of the outcome of the central bank's rate-setting meeting later in the day. Top lender the Commonwealth Bank of Australia and Westpac Banking Corp lost 1.3 percent and 1.6 percent, giving up some of the gains made in dividend and earnings-driven rallies to all-time highs last week. "If we don't see a rate cut and the market is tending to lean towards that side, only very slightly, the shine in the yield plays is going to come off and that's what we're seeing this morning," said Evan Lucas, market strategist at IG. "If there is a rate cut watch them pick up, they will bounce very very hard." Dividend yields on average for the big four banks is some 5.1 percent, compared to between 3 to 4 percent yields for 12-month maturity depositor accounts. An interest rate cut to record lows will make stocks with high yields attractive to investors. The S&P/ASX 200 index lost 21.9 points to 5,134.3 by 0149 GMT. The index rose 0.5 percent on Monday. A Reuters poll of 21 economists found only four were tipping an easing by the Reserve Bank of Australia when it announces its decision at 0430 GMT. Still, markets think it will be a closer call, and are pricing in a 50-50 chance of a 25-basis-point cut to an historic low of 2.75 percent. "Until we see the data drop from the RBA this afternoon, expect trading to be light and that's what it's been like, volumes are fairly low and for people to continue positioning themselves that there won't be a cut," Lucas said. Global miners were firm and helped limit the losses on the benchmark index. BHP Billiton Ltd added 1.6 percent while rival Rio Tinto Ltd climbed 1.7 percent after Shanghai copper futures jumped by their 5 percent daily limit, tracking sharp gains in London in the previous session. Consumer retail staples Woolworths Ltd and Wesfarmers, which have relatively high yields of 3.6 percent 4 percent respectively, were trading lower, losing 2.3 percent and 1.6 percent. On Wall Street, the S&P500 closed at another record high on Monday, pushing further above 1,600 as financial shares led the way after Bank of America's settlement with MBIA. New Zealand's benchmark NZX 50 index added 0.4 percent or 20.2 points to 4,616.4. STOCKS ON THE MOVE * Coca-Cola Amatil shares dropped 8.9 percent to A$13.16 after the company said it expects a decline in first-half earnings before interest and tax of 8-9 percent and a full year result broadly in line with last year. The company also revealed it has requested World Trade Organization tariff protection for its Australian fruit growing and processing supplies. (0146 GMT) * Shares in Billabong were in a trading halt pending a further announcement in connection with an ongoing bidding process. (0147 GMT) * Logicamms Ltd climbed 5.1 percent to A$1.45 after the company announced it acquired oil and gas engineering specialist ITL. (0147 GMT) * Shares in Slater and Gordon Ltd were in a trading halt after the legal services provider announced a $63.9 million equity raising to accelerate its UK expansion. (0147 GMT) * Telstra Ltd, a high yielding stock, fell 0.7 percent to A$5.03 after the top telecommunications provider secured spectrum licences in the 700 mhz and 2.5 ghz bands. (0153 GMT) * Whitehaven Coal Ltd jumped 1.9 percent to A$1.89 after the coal producer said it achieved record monthly coal railings of 0.95 metric tonnes in April 2013. (0148 GMT) (Reporting by Thuy Ong and Jane Wardell; Editing by Shri Navaratnam) Link this Share this Digg this Email Reprints

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