Australia: Shares head for worst start to a year on China seesaw

[SYDNEY] Australian shares fell for a sixth straight session on Friday, headed for their worst start to a year on record, but recovered slightly after China's exchanges opened higher.

China's major stock indexes rose more than 2 per cent in early trade on Friday after Beijing dropped a circuit breaker mechanism blamed for aggravating market crashes this week.

The S&P/ASX 200 index fell as much as 1.4 per cent in early trading but recovered briefly when the Shanghai Stock Exchange opened in positive territory. By 0147 GMT, the index was down 42.3 points, or 0.9 per cent, at 4,678.0.

The benchmark is down more than 6 per cent for the year so far, making for its worst opening week on record. "There's no doubt it is a very, very tough time, and the fact that our largest trading partner is currenty being questioned on whether it has control of its economy is making things pretty tough," said IG Markets strategist Evan Lucas. "The possible fallout of China having a hard landing is always going to have a massive effect on our economy." Financial stocks were the biggest drag on the index, with Commonwealth Bank of Australia down 1.7 per cent, National Australia Bank down 1.4 per cent, Australia and New Zealand Banking Group down 0.5 per cent and Westpac Banking Corp off by 0.3 per cent.

Fund manager Perpetual was down 4 per cent.

Dairy exporters also fell, on concerns about their exposure to Chinese consumer demand. Bega Cheese dropped 7 per cent and Blackmores, the company it is joining to export baby formula to China, was down 2.5 per cent.

Miners defied the index and edged higher amid signs a downturn in commodity prices may be over. Rio Tinto fell 2.3 per cent while rival BHP Billiton was flat. BHP spin-off South32 was up nearly 3 per cent.

Energy stocks also rose amid hopes the oil price had stabilised after hitting 12-year lows. Woodside Petroleum was up 3 per cent and Oil Search added 1.4 per cent.

New Zealand's benchmark S&P/NZX 50 Index was down 1.1 per cent, or 68.53 points, at 6,144.56.

There were two gainers, Steel & Tube, up 2.2 per cent and Kathmandu, up 2.0 per cent. Hardest hit were another dairy company, A2 Milk, down 9.2 per cent and telco Chorus, down 2.5 per cent.

REUTERS