Reuters: Hot Stocks: Australian shares surrender early gains as miners extend slump

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Australian shares surrender early gains as miners extend slump May 16th 2013, 06:53 Thu May 16, 2013 2:53am EDT (Adds details, comments) SYDNEY May 16 (Reuters) - Australian shares reversed gains and ended 0.5 percent lower on Thursday as sliding metal prices weighed on mining stocks, offsetting early leads spurred by new record highs on Wall Street. The S&P/ASX 200 index finished the session 26 points lower at 5,165.7. The index fell 0.6 percent on Wednesday. Gold stocks took a beating after bullion slid below $1,400 an ounce, losing 2 percent and hitting its lowest in nearly a month as a record rally in U.S. equities and economic optimism undermined the precious metal's safe-haven appeal. Gold miner Newcrest Mining Ltd lost 5.3 percent to 8-year lows, Regis Resources Ltd fell 3.4 percent and Perseus Mining Ltd shed 9.5 percent to 4-year lows. "We're continuing to see weakness in the materials space," said Peter Esho, investment adviser at Wilson HTM Investment Group. "There isn't too much trust out there. A lot of investors are running a ruler over earnings for the industrial space having no regard at all for the materials space and throwing out the mining stocks throughout that process." Meanwhile global iron ore miners BHP Billiton Ltd and Rio Tinto Ltd lost 0.8 percent and 2 percent, respectively. Shanghai steel futures fell to their lowest in eight months on Thursday, reflecting weaker demand in top market China which has cut buying interest for raw material iron ore. Mining services firms were also battered, with Boart Longyear Ltd down 6.7 percent and Ausdrill Ltd plumbing 11.5 percent. Both stocks finished the session at 4-year lows. "Offshore selling is targeting our large materials and industrial stocks in response to our weaker Aussie, a larger than expected deficit and the resurgence of the U.S. markets," said Ben Taylor, sales trader at CMC Markets. Virgin Australia Holdings Ltd plumetted 17.4 percent after the country's No.2 air carrier issued a profit warning overnight. Coffey International Ltd recovered 29.2 percent after a large sell-off earlier in the week. Defensives finished the session mixed. Top telecommunications provider Telstra Ltd climbed 1.2 percent, while consumer retail staples Woolworths Ltd and Wesfarmers Ltd added 0.9 percent and 3.3 percent, respectively. Biotech firms were weaker, with CSL Ltd losing 2.6 percent and Cochlear Ltd dropping 2.4 percent. New Zealand's benchmark NZX 50 index slipped 0.2 percent, or 10.3 points, to finish the session at 4,636. (Reporting by Thuy Ong; Editing by Kim Coghill) Link this Share this Digg this Email Reprints

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