Reuters: Hot Stocks: Australia shares fall 1.3 pct on weak US lead; banks, miners slump

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Australia shares fall 1.3 pct on weak US lead; banks, miners slump Aug 7th 2013, 03:12 Tue Aug 6, 2013 11:12pm EDT (Adds analysis, quotes, stocks on the move) SYDNEY/WELLINGTON Aug 7 (Reuters) - Australian shares skidded 1.3 percent on Wednesday, its biggest fall in five weeks, hit by sharp falls in miners and financials as regional markets tracked a soft Wall Street lead amid uncertainty about the U.S. Federal Reserve's stimulus programme Bellwether miners BHP Billiton Ltd and Rio Tinto Ltd each lost 1.6 percent. Among smaller miners, Iluka Resources Ltd dropped 2.3 percent while Indochine Mining Ltd plunged 5.3 percent after the company completed its capital raising at a slightly discounted A$0.08 per share for funds to be used in its Mt Kare gold and silver project. Mining stocks have been battered in recent months as falling commodities prices and a slowdown in China, Australia's biggest export market, have clouded the sector's outlook. In another blow to miners, Australia's High Court on Wednesday found a controversial profits tax on iron ore and coal mines was constitutional. Australia's number three iron ore miner Fortescue Metals Group Ltd, which led the challenge to the Minerals Resource Rent Tax (MRRT), shed 2.5 percent. "Commodity markets move in cycles, and clearly they're not in an upswing," said Peter Mavromatis, chief investment officer at Beulah Capital. The S&P/ASX 200 index fell 63.8 points to 5,041.8 by 0300 GMT, its biggest one-day drop since July 3. The benchmark dipped 0.1 percent on Tuesday. Wall Street's drop overnight provided a bearish backdrop for the market. Investors continue to fret about when the U.S. Federal Reserve would begin to roll back its stimulus amid a recent batch of mixed data that appeared to back both an earlier and later start to the tapering timetable. The financial sector extended losses, as investors cashed in on the high-yielding stocks after a stellar performance from the big four banks so far this year. Top lender the Commonwealth Bank of Australia dropped 1.3 percent while Westpac Banking Corp lost 1.5 percent. The flagship banks currently have high dividend yields that average some 5.3 percent each. "I think markets are generally rotating out of those (high-yield banks) names and looking for growth elsewhere, potentially in other cyclical companies," said Akshay Chopra, an investment analyst at boutique fund manager Karara Capital in Melbourne Elsewhere Service Stream jumped 12.5 percent, recovering some losses from the previous session after its joint venture dropped contracts to build Australia's national broadband network (NBN) in two states. New Zealand's benchmark NZX 50 index fell 0.4 percent or 18.3 points to 4,557.2. Healthcare company Abano Ltd rose 11.1 percent to NZ$6.51, a four month high, after receiving and rejecting a takeover offer from an unnamed party associated with one of its major shareholders. It said the proposal offered it nothing, but it now expects a full, formal takeover offer. New Zealand's Chorus Ltd, the main telephone network operator and builder of much a national ultrafast broadband network, rose as much as 6.2 percent, after the government said it was looking at changes to the pricing rules for broadband services. The stock last traded up 4.8 percent at NZ$3.04. (Reporting by Thuy Ong and Gyles Beckford; Editing by Shri Navaratnam) Link this Share this Digg this Email Reprints

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