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Australia shares fall ahead of key US payroll data; NZ flat

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[BENGALURU] Australian shares fell on Friday in thin trade, with losses led by materials and financials, and investors were on the sidelines ahead of key US data which could add momentum to expected increases in US interest rates.

"We've got a major market event tonight... it looks like large institutional investors who have driven markets this week are sitting on the sidelines," said Michael McCarthy, chief market strategist at CMC Markets.

Investors are focusing on the US payrolls report later tonight for confirmation that the American economy continues to strengthen, with an eye on an expected hike in benchmark US interest rates later in the month.

The S&P/ASX 200 index was down 0.53 per cent, or 28.941 points, to 5,471.1 by 0126 GMT. The bourse gained 1.1 per cent on Thursday, and is on track to slide about 0.66 per cent on the week.

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The metals and mining index shed as much as 1.1 per cent with most of the mining giants in the red.

BHP Billiton Ltd fell about 2 per cent, reversing yesterday's near 5 per cent surge, while Rio Tinto Ltd dipped about one per cent.

Fortescue Metals Group Ltd dropped as much as 4 per cent.

Fortescue has quadrupled in value over the year and the share price is adjusting on that account, despite the jump in iron ore prices overnight, Mr McCarthy added.

Energy stocks were in the red despite oil prices soaring overnight.

Financial stocks were lower with the "Big Four" banks weighing down the index most.

"For banks, index selling is being spread across the market. Given the prominence of banks and BHP, they are taking a hit."

Consumer staples stocks also lost heavily, with losses led by Bellamy's Australia Ltd, a manufacturer of organic baby formula.

Bellamy's slid as much as 43.9 per cent after it saying it expected sales momentum to be hit by import regulations in China.

This rubbed off on other China-exposed stocks such as Blackmores Ltd and Bega Cheese Ltd.

New Zealand's benchmark S&P/NZX 50 index fell 0.12 per cent to 6,973.450 at 0126 GMT with declines in consumer staples offset by gains in healthcare stocks.

China-exposed a2 Milk Co was the worst performer, falling up to 11.2 per cent, its biggest percentage plunge in more than six months.

Fisher & Paykel Healthcare Corp was the top gainer, surging 7.8 per cent to mark its biggest intraday percentage gain in more than three years after it won a German court case against ResMed Inc.