Australia & NZ: Shares stumble as oil drop spooks markets

[SYDNEY] Australian and New Zealand shares fell on Wednesday, joining a global retreat as sliding oil prices took a heavy toll on energy firms and fuelled worries about the health of the world economy.

Australia's S&P/ASX 200 index shed 2.1 per cent, or 103.12 points, to 4,890.20 by 0211 GMT. It fell as far as 4,885.90, its lowest in over a week.

Almost every sector was in the red. Oil and gas producer Santos skidded 7.5 per cent, while Woodside Petroleum slumped 4.1 per cent.

Global miners BHP Billiton and Rio Tinto were also under pressure with BHP shedding 4.2 per cent.

The big four banks were not spared and National Australia Bank suffered a 5.5 per cent drop.

The mood across the Tasman Sea was just as sombre. New Zealand's S&P/NZX 50 index fell 0.70 per cent, or 43.25 points, to 6,136.83.

Even a surprisingly upbeat employment report failed to cheer investors. New Zealand's jobless rate dropped to 5.3 per cent in the fourth quarter, reaching its lowest since March 2009.

"Net on net, we feel the data reduce the odds of an OCR cut in the near term. We'd go so far to say as they rule out March completely and favour an ongoing watchful stance from the RBNZ,"said Philip Borkin, senior economist at ANZ.

In a closely watched speech, RBNZ Governor Graeme Wheeler also gave no hint that a rate cut was imminent, saying the current low inflation environment is unlikely to prompt the bank into action.

"It would be inappropriate to attempt to offset the low oil price effect through the OCR," he said.

However, he said monetary policy will continue to be accommodative and recognised that most of the risks facing the economy are on the downside.

A big drag on the New Zealand market was dual-listed Australian banks. Australia and New Zealand Banking Group fell 4.5 per cent, while its Australia-listed shares shed 3.1 per cent.

REUTERS