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Australia, New Zealand: Shares slip as rocket attack on Iraq base quells risk appetite

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Giving up slim gains at open, the S&P/ASX 200 index shed 0.9 per cent or 59 points to 6,768 by 0034 GMT. The benchmark had risen 1.4 per cent on Tuesday, helped by a short lull in tensions.

[BENGALURU] Australian shares fell on Wednesday after Iran launched a major ballistic missile attack on US-led forces in Iraq days after the killing of a Iranian commander, sparking worries of a wider war in the Middle East.

Just hours earlier, US President Donald Trump said the United States was prepared for any attack by Iran and vowed to retaliate if the latter attacked any US assets or Americans.

Giving up slim gains at open, the S&P/ASX 200 index shed 0.9 per cent or 59 points to 6,768 by 0034 GMT. The benchmark had risen 1.4 per cent on Tuesday, helped by a short lull in tensions.

"We really don't know in what form, but we can anticipate that there will be escalation. I can only see more volatility going forward at this juncture," said Brad Smoling, managing director at Smoling Stockbroking.

"This might just be the straw that broke the camel's back," he added, referring to the recent record highs US stocks touched and broadly upbeat performance of global equities, which is now threatened by the growing tensions in the Middle East.

Risk-averse sentiment hurt financials most, with all of the "Big Four" heavyweight lenders falling. Westpac Banking Corp fell 1.1 per cent while the biggest bank, Commonwealth Bank of Australia shed 0.8 per cent.

Australia and New Zealand Banking Group and National Australia Bank gave up 1 per cent each.

Healthcare stocks also retreated, with CSL, the benchmark's fourth largest stock, falling 1.1 per cent. Cochlear Ltd and US-based Resmed Inc shed 2.1 per cent and 1 per cent, respectively.

The index's two largest stocks, global miners BHP Group and Rio Tinto fell 1.1 per cent and 1.3 per cent, respectively, stepping up pressure on the index.

Safe-haven gold stocks surged nearly 3.8 per cent to hit an over two-month high, with heavyweight Newcrest Mining adding 3.2 per cent.

Northern Star Resources, Evolution Mining and Resolute Mining gained between 3.5 per cent and nearly 6 per cent each.

The energy sector traded at near 15-month high, as oil prices surged on the news. Woodside Petroleum tacked on 1.2 per cent while smaller peer Santos climbed 2.5 per cent.

In nearby New Zealand, the benchmark S&P/NZX 50 index fell 0.6 per cent or 69.53 points to 11,560.33.

Air New Zealand was among top losers, down 2 per cent, while dairy giant a2 Milk Company lost 0.5 per cent.

REUTERS

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