Aussie shares muted on bearish message from China; NZ up

[BENGALURU] Australian shares were subdued on Friday, with investor sentiment dampened by a slump in the Chinese stock market following a sell-off in Chinese bonds as Beijing pressed ahead with its deleveraging drive.

The S&P/ASX 200 index fell 0.06 per cent or 3.595 points to 5,982.6. The index rose 0.43 per cent on the week.

China's blue-chip CSI300 index on Thursday tumbled nearly 3 per cent to its biggest drop since June 13, 2016. The index ended Friday morning down 0.8 per cent, but was trading up 0.1 per cent at 0628 GMT.

The selloff comes as the Chinese government steps up its deleveraging campaign, most recently intended to curtail micro-lending and to regulate asset managers more tightly, with sustained offloading of Chinese bonds.

"The trade-weighted index has fallen substantially and is highly correlated with Chinese equities and demand for commodities. It is basically falling because of the deleveraging and shadow banking restrictions," said Mathan Somasundaram, Market Portfolio Strategist at Blue Ocean Equities.

The finance-heavy benchmark was dragged by the ASX financial index falling 0.4 per cent with the 'Big Four' banks down between 0.3 per cent to 0.7 per cent.

Industrial stocks added to the losses with Qantas Airways Ltd slipping 1.8 per cent and extending its losses to third straight sessions. Plumbing supplies manufacturer Reliance Worldwide Corporation Ltd fell 4.6 per cent.

Health care stocks gained, with biotheraputics developer CSL Ltd rising 0.4 per cent to a record high and extending gains to a sixth straight session.

Hospital operator Ramsay Health Care Ltd gained 1.8 per cent.

New Zealand's benchmark S&P/NZX 50 index rose 0.35 per cent or 28.34 points to finish the session at 8,130.290. The index gained 0.85 per cent for the week.

Healthcare stocks spearheaded gains with Fisher & Paykel Healthcare Corporation Ltd and rival Ryman Healthcare Ltd adding most to the index's move.

Fisher and Paykel rose for a second day, adding 1.7 per cent. Ryman Healthcare jumped 3.7 per cent to hit a six-week high.

REUTERS