Australia: Shares flat, New Zealand snaps winning streak

[WELLINGTON] Australian stocks were flat on Monday with mining shares on the defensive ahead of a set of Chinese economic data, offsetting a massive rally in Westpac Banking Corp.

The S&P/ASX 200 index eased 0.07 per cent, or 3.8 points, to 5,264.4 by 0110 GMT. Weighing on the overall market, BHP Billiton dipped 1.2 per cent, while fellow global miner Rio Tinto shed 0.7 per cent.

Data due later in the day is expected to show China's third quarter economic growth slowed to below 7 per cent for the first time since the global financial crisis.

In contrast, shares in Westpac climbed as much as 4.5 per cent to a two-month high after a trading halt was lifted. Last week, the lender said it would raise A$3.5 billion to meet strict capital rules and surprised the market by lifting its home loan rates to protect its profits.

The unexpected move has fuelled speculation that other lenders will follow suit. Investors are looking to see if Commonwealth Bank of Australia will be next to raise its mortgage rates.

National Australia Bank and Australia and New Zealand Banking Corp. could wait until they reported their full-year earnings next week.

If all the banks lifted their home loan rates, that would be tantamount to a tightening of financial conditions - an unwelcome development for a fragile economy.

As a result, speculation of a cut in official interest rates has also grown. "If CBA does raise rates, the interbank market's rate cut expectations will rapidly ascend towards 100 per cent probability," said Evan Lucas, market strategist at IG.

For more individual stocks activity click on Across the Tasman Sea, New Zealand stocks struggled to maintain the momentum that has swept the benchmark S&P/NZX 50 index to a two-month high.

It was last a tad softer at 5,819.3, having peaked at 5,867.9 - a high last seen on Aug 11.

The index has rallied over 4 per cent this month alone.

Diversified retailer Warehouse Group Ltd slid 1.5 per cent, giving back a chunk of Friday's 2.3 per cent jump. Contact Energy eased 1.0 per cent, pulling away from a one-month peak set on Friday.

REUTERS