[SYDNEY] Australian shares clawed back hefty early losses on Monday as investors looked past concerns about the impact of a higher US dollar and pondered the likely positive impact on exporters.
Stocks fell nearly 1 per cent in early trading after weak US inflation data painted a downbeat picture of the economy while expectations of a rate hike kept the dollar higher, putting pressure on US exporters.
Continuing weakness in oil and iron ore prices also weighed on Australian resources firms.
But by mid-session the losses had narrowed substantially as investors looked to a positive lead from Asia, where exporters hope to benefit from a more favourable foreign exchange rate.
"One man's currency loss is another man's currency gain,"said CMC Markets chief market strategist Michael McCarthy.
"That strong US dollar is bad for US companies, but it's a real positive for exporters across the Asia Pacific region."
By 0149 GMT, the S&P/ASX 200 index was down 7.5 points or 0.1 per cent at 5807.0. In the past month, the benchmark has risen 3.5 per cent then lost the same amount.
Energy stocks led the market lower after US crude fell to a 6-year low on a strong dollar and concerns America will run out of oil storage.
Woodside Petroleum was down 2.2 per cent and Oil Search was 3.8 per cent lower while Santos dipped 2 per cent.
In the broader resources, BHP Billiton slipped 0.8 per cent after the iron ore price remained at record lows. Rival Rio Tinto firmed 0.3 per cent.
Banks were higher, with Commonwealth Bank of Australia up 0.6 per cent, National Australia Bank 0.7 per cent higher, and Westpac Banking Corp up 0.5 per cent.
Telecommunications giant Telstra Corp declined 0.2 per cent after smaller TPG Telecom said it plans to buy iiNet, creating the country's second largest broadband provider. iiNet was up 2 per cent and TPG was down 4.5 per cent.
New Zealand's benchmark NZX50 index rose 16 points or 0.3 per cent to an all-time intraday high of 5,926.31, boosted by ongoing gains in accounting software firm Xero, which hit its highest in nearly eight months.
Xero rose 3.5 per cent to NZ$26.49, its highest since late July, on growing optimism about the fast-growing company's aggressive global expansion plans after it secured additional investment last month.
Sky Television New Zealand and specialised milk processor A2 Milk Company each gained 1.9 per cent.
A2 was boosted after it said it received approval to list on the Australian stock exchange, which would improve trading liquidity.