Reuters: Hot Stocks: Australia shares fall to 5-mth low as banks drag; Discovery Metals jumps

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Australia shares fall to 5-mth low as banks drag; Discovery Metals jumps Jun 12th 2013, 07:38 Wed Jun 12, 2013 3:38am EDT * S&P/ASX 200 index down 32.6 points to 5-mth low * Financials lead losses on foreign selling, higher bond yield * BHP, Rio Tinto slip but loss capped * Discovery Metals surges on production update (Adds market performance details, analyst comments) SYDNEY, June 12 (Reuters) - Australian shares fell 0.7 percent to close at a five-month low on Wednesday as a global sell-off of equities deepened on concerns that major central banks would not offer more support for markets and economies. "What we've seen from the last 24 hours around the globe is a sentiment shift. Any expectation that there will be further announcement of stimulus was frankly unrealistic," said CMC Markets chief market strategist Michael McCarthy in Sydney. The S&P/ASX 200 index dropped 32.6 points to 4,724.5, its lowest since mid-Janaury. The benchmark rose 0.4 percent on Tuesday, snapping three sessions of losses. Financials led losses. Top lender the Commonwealth Bank of Australia slipped 0.4 percent, while the other three major banks - Westpac Banking Corp, National Australia Bank Ltd and Australia and New Zealand Banking Group - all dropped 1.2 percent. "Traders believe that the major action in today's market is international selling of major banks' shares, on the basis of the view that the Australian dollar is likely to go lower," said McCarthy. Traders were also more likely to exit banks as Australian bond yield was at the highest level since August 2010, IG's chief market strategist Chris Weston said in a note. "Clearly as bond yields increase, the still high net yields on offer from the banks become less compelling, hence banks are sold," said Weston. The index lost 3.8 percent last week on concerns over slowing growth in China, fear the U.S. Federal Reserve will wind back its stimulus this year and volatility in Japanese equities. The market has dived 10 percent from its latest peak of 5,249.6 on May 15. "On the chart we've got a very important support zone between 4,670 and 4,720, and the index is respecting that level at the moment, suggesting that is where the bargain hunters are waiting," CMC Markets' McCarthy said. Weak metals prices hurt sentiment for mining stocks but losses were limited after mining shutdowns helped BHP Billiton Ltd cap copper processing fees and Rio Tinto Ltd announced plans to start exporting copper from the $6.2-billion Oyu Tolgoi mine in Mongolia. Both BHP and Rio Tinto pared some losses and dipped 0.4 percent and 0.3 percent, respectively. Top Australian gold miner Newcrest Mining Ltd dropped 0.8 percent as bullion extended losses on Wednesday. Newcrest also defended the timing of its profit warning in response to a query from Australia's stock exchange operator, saying it issued the warning five days ago as soon as the board had approved its 2014 budget. Mining service company Transfield Services Ltd tumbled 6.3 percent after appointing BHP Billiton's Vincent Nicoletti as its chief financial officer. Building materials group James Hardie Industries PLC lost 0.8 percent after the company announced the retirement of its chief financial officer. Discovery Metals Ltd surged 8.3 percent after the Botswana-focused copper miner updated the market with its Boseto operations and said production was in line with the plan for the month. Discovery shares have lost almost 40 percent since it resumed trading on May 21 after a long suspension and said it was seeking a buyer. Treasury Wine Estates Ltd, which has significant exposure to the U.S. market, jumped 3.2 percent on the back of the weaker Australian dollar. The stock has gained 29 percent this year. Australia's biggest phone company Telstra Corp Ltd added 0.2 percent on defensive buying, with its trading volume among the highest in the market. New Zealand's benchmark NZX 50 index dropped 0.5 percent or 21.5 points to 4,442.1. (Reporting by Maggie Lu Yueyang; Editing by) Link this Share this Digg this Email Reprints

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