Australia: Shares slip, hover at 8-mth lows on global growth worries

[SYDNEY] Australian shares slipped 0.8 per cent on Wednesday, hovering near 8-month lows as heightened global growth concerns prompted investors to seek shelter in safe-haven assets like government debt.

Growth sensitive sectors such as basic materials and consumer cyclicals were the hardest hit, shedding more than 1 per cent each. Losses were broad-based, with Challenger and Fairfax Media each down around 4 per cent.

The S&P/ASX 200 index fell 40 points to 5,244.1 by 0140 GMT after earlier trading at a high of 5,284.6. The benchmark has shed 0.8 per cent so far this week and remained near eight-month lows touched on Tuesday.

US stocks ended sharply lower on Tuesday after weak data in Europe and a downgrade of growth forecasts for the third time this year by the International Monetary Fund.

The Australian index had already lost nearly 6 per cent in September, pressured by slowing growth in China, rising bond yields and a sharp fall in iron ore prices - Australia's top export earner. For the year, the benchmark has lost 0.8 per cent.

Global miners BHP Billiton Ltd and Rio Tinto Ltd tumbled around 2 per cent and 1.4 per cent, respectively, although iron ore prices found a firmer footing at around US$80 a tonne.

The technology sector bucked the broader market, and was the only winner on the ASX 200 with a 0.9 per cent gain.

Some analysts remained sanguine about a potential recovery in equities. "Investors are very closely monitoring what's happening with credit spreads and if they were to remain narrow, the market will probably rebound," said Damien Boey, equity strategist at Credit Suisse. "Effectively the bond yield-earnings yields equation is in favour of equities (particularly in an environment of low interest rates)," he said.

Shares in Australian junior oil explorer FAR Ltd climbed 40 per cent to A$0.14 after it and other joint venture partners including Cairn Energy discovered oil off the coast of Senegal.

Across the Tasman sea, New Zealand's benchmark NZX50 index slipped 30.06 points to 5,205.64, weighed by global growth worries.

Companies with significant overseas exposure struggled, with accounting software developer Xero, which has expanded aggressively into Australia, North America and Europe in the past year, falling 2.2 per cent to a one-week low of NZ$21.20.

Pumpkin Patch fell 5 per cent to a three-week low of NZ$3.08, on growing concerns about the struggling children's clothing retailer which is trying to expand into Australian, US and European markets.

Jewellery retailer Michael Hill, which earns more than 75 per cent of its revenues from Australia, Canada and the United States, slumped 3.0 per cent to NZ$1.26. - Reuters