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Australia: Shares higher as banks counter BHP selloff

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[SYDNEY] Australian shares edged higher on Wednesday as heavy selling in miner BHP Billiton following a deadly industrial accident at a Brazilian mine undercut a bounce in bank stocks.

BHP, the world's largest miner, saw its shares fall to their lowest intraday level since 2008 after a dam burst at a mine it partly owns, resulting in at least six deaths and dozens more missing.

The selloff eroded gains in the bank sector as investors bought financial stocks that have been heavily sold this year amid tough new capital rules and fears of a housing slowdown.

The S&P/ASX 200 index was up 0.2 per cent or 8.3 points at 5,107.5 by 0134 GMT. The benchmark is down nearly 6 per cent this year.

"The losses in BHP are well and truly offset by the gains in the banks," said James McGlew, executive director of corporate stock broker Argonaut Ltd.

Investors are also cautious ahead of an expected U.S. rate hike in December. "There is a need in the market to have this out and done and dealt. You might get a short, sharp turn down but this will probably underpin a nice rally through the Christmas time once it is out," ,Mr McGlew added.

BHP Billiton was down 2.6 per cent and its spin-off South32 was off by 2.2 per cent, while rival Rio Tinto was flat and iron ore giant Fortescue Metals Group rose 3 per cent.

Energy stocks were also weaker, with Woodside Petroleum down 0.3 per cent and Origin Energy down 1.4 per cent, while Oil Search added 0.5 per cent.

Australia and New Zealand Banking Group led the banks higher, up 2.6 per cent, while Commonwealth Bank of Australia rose 1.5 per cent and National Australia Bank added 1 per cent. Westpac Banking Corp fell 2.2 per cent after trading ex-dividend.

Major retailers were also stronger. No. 1 supermarket firm Woolworths edged 0.3 per cent higher and Wesfarmers rose 0.4 per cent.

New Zealand's benchmark NZX 50 index gained 0.2 per cent or 12.4 points to 6,015.22, in sight of a record peak touched earlier in the week. The index has jumped about 8 per cent this year.

New Zealand's central bank highlighted increasing risks to the financial system from weak dairy prices and soaring property markets.

a2 Milk Company was the most actively traded stock, up 4.9 per cent.

REUTERS