Australia shares dragged down by banks, basic materials; NZ lower

[SYDNEY] Australian shares fell to their lowest in close to two months on Thursday as many investors were edgy about global economic prospects, and some encouraging trade data from China did not lift spirits.

All sectors, led by financials and basic materials, wallowed in red seeking cues from global economic events queued up in the day.

The S&P/ASX 200 index was at its lowest since mid-July, down 47.55 points, or 0.9 per cent, at 5376.7 at 0246 GMT. The benchmark rose marginally on Wednesday.

China August trade data, awaited as a gauge of global demand, topped forecasts as imports recorded their first annual rise since late 2014. But that didn't help Australian shares.

Australia's own better-than-expected trade numbers elicited no reaction from the markets.

The European Central Bank meets later in the day and will probably respond to pressure for further easing by announcing an extension to its asset purchase programme by year-end, a Reuters poll showed.

"There is certainly cautiousness in the market," said Tony Farnham, economist with Patersons Securities.

"And I genuinely believe that's going to be something that stays in place for an extended period as we work way through all the central bank meetings."

The Bank of Japan, which meets Sept 20-21, is split on whether to add stimulus, while weak data from the US recently has reduced chances for a Federal reserve rate rise in September.

Basic materials were the index's worst performers, weighed down by BHP Billiton Ltd and Rio Tinto Ltd, losing 1.7 per cent and 1.3 per cent respectively.

Gold stocks fell too. Northern Star Resources was off 3 per cent and St Barbara Ltd 3.6 per cent.

The "Big Four" banks lost between one and 2 per cent, pulling down the financial sector, the benchmark's biggest.

Oil prices extended gains by over 1.5 per cent but provided energy stocks no relief. Woodside Petroleum and Oil Search Ltd shed 2 per cent and one per cent respectively.

New Zealand's benchmark S&P/NZX 50 index was 0.4 per cent, or 29.66 points, lower at 7,540.96.

The benchmark closed at a record high on Wednesday.

Gains in energy were offset by losses in financial and consumer stocks.

Westpac Banking Corp was 0.8 per cent lower, while Australia and New Zealand Banking Group was down 1.8 per cent.

Air New Zealand Ltd's shares slumped as much as 17 per cent, their biggest percentage loss in nearly 15 years, as the carrier traded ex-dividend.

REUTERS