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Australia: Shares down as Greece fears, pre-earnings caution weigh

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[SYDNEY] Australian shares fell for a second day on Tuesday, as concerns about Greek debt negotiations gave investors good reason to cut back on exposure after a run of gains stretching over two weeks.

Lacklustre domestic business confidence data added to the cautious tone ahead of the domestic earnings season which is expected to show the impact of a collapse in commodities prices in the past six months. "It's getting to that phase that markets generally get to after a big run where investors ask themselves 'should I be buying at these levels?" said IG markets strategist Stan Shamu. "There's a bit of risk coming on board with Greece issues dominating, and we've got some big earnings coming up." The likelihood of a "Grexit" from the euro zone has increased after a new Greek government ruled out extending the country's bailout deal and said some reforms imposed by lenders will be reversed. The European Commission warned Greece it should not expect unconditional cooperation.

The S&P/ASX 200 index fell 14.9 points or 0.3 per cent to 5800.0 by 0141 GMT, extending the previous day's decline which followed a record-matching 12 straight winning sessions.

Financial stocks, which posted steady gains throughout the prior two-week rally, fell the most on Tuesday. Commonwealth Bank of Australia and Westpac Banking Corp fell 0.6 per cent each, while National Australia Bank dipped 0.7 per cent.

Insurers fared worse; QBE fell 1 per cent and AMP dropped 0.8 per cent.

Energy stocks skidded as a bounce in the oil price overnight failed to ignite hopes it will stage a full-blown recovery.

Woodside Petroleum dropped 1.9 per cent and Oil Search fell 0.7 per cent.

In the broader resources sector, BHP Billiton and Rio Tinto gained about half of one percent after commodities rose.

Mining services firm Bradken, which recently had a takeover approach terminated because of concerns about industry uncertainty, slumped 23 per cent, the biggest fall on the market, after it reported a half-year loss.

New Zealand stocks were firmer with the benchmark NZX-50 index 0.2 per cent higher at 5781.03.

Casino operator Skycity reclaimed some of the previous day's losses, rising 1.3 per cent, as the government indicated it might fund cost overruns for a proposed convention centre project.

The No. 2 stock by capitalisation, telecommunications company Spark, was up 0.9 per cent while Auckland International Airport was up 1.6 per cent.

REUTERS