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Australia: Shares end flat as central bank governor flags 'bumpy' road to recovery

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Australian shares ended little changed on Wednesday as optimism over a quarterly economic recovery was tempered by cautious comments from the central bank, while escalating trade tensions with China also dented investor sentiment.

[BENGALURU] Australian shares ended little changed on Wednesday as optimism over a quarterly economic recovery was tempered by cautious comments from the central bank, while escalating trade tensions with China also dented investor sentiment.

The country's economy expanded by a bigger than expected 3.3 per cent in the September quarter, following a coronavirus-induced contraction in June, though the central bank governor signalled monetary policy will stay accommodative for a while.

There is still a high degree of uncertainty about the outlook, said Reserve Bank governor Philip Lowe Lowe, adding that the economic recovery is underway, but will be "uneven and bumpy".

Mining sub-index and gold stocks helped the S&P/ASX 200 index close 0.03 per cent higher at 6,590.2 points, reversing course after trading in the red throughout the afternoon.

BHP Group and Rio Tinto climbed as much as 2.2 per cent and 1.9 per cent, respectively, as Dalian iron ore hit a record high.

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"While the bounce is impressive, it still leaves the economy 4.2 per cent smaller than it was prior to the pandemic and 3.9 per cent smaller than a year ago... it will be some time before we can be confident that the economy is out of the woods," Felicity Emmett, senior economist at ANZ, wrote in a note.

However, the deteriorating trade relationship with China was a "very serious" matter, Australian Treasurer Josh Frydenberg said.

China has imposed dumping tariffs of up to 200 per cent on Australian wine imports, and curtailed exports of lobsters, beef, timber and coal from Down Under.

"We're seeing some of the initial phases of the start of a protracted trade war with China with Australia, which is very concerning," said Brad Smoling, managing director at Smoling Stockbroking.

New Zealand's benchmark S&P/NZX 50 index ended flat at 12,728.69 points as gains in utilities and industrial stocks were offset by losses in the healthcare and consumer sectors.

REUTERS

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