Australia shares fall as bank stocks lose steam, NZ steady

[SYDNEY] Bank stocks lost steam and pulled Australian shares lower on Friday as investors booked profits after two sessions of strong gains.

The S&P/ASX 200 index was down 26.55 points, or 0.5 per cent, at 5,734.9 by 0300 GMT. The benchmark rose 0.5 per cent on Thursday.

A gauge of financial stocks dipped over 0.7 per cent while three of the 'Big Four' banks lost between 0.3 to 0.6 per cent. The country's biggest bank by market value, Commonwealth Bank of Australia, was flat.

"The banks have had two very strong days, with 3 per cent gains in the sector," said Michael McCarthy, chief market strategist at CMC Markets.

Financials had rallied as the banks, especially the Big Four, declared that they were comfortable with new capital rules unveiled by the Australian Prudential Regulation Authority (APRA).

As these very strong gains are "combined with the high Australian dollar, international investors are locking in some of those recent gains by selling today," Mr McCarthy said.

The Aussie dollar touched a two-year peak this week as encouraging jobs data fuelled hopes of a rate hike by the central bank, but it slipped on Friday.

Mining heavy weights BHP Billiton and South32 slipped nearly 1.9 per cent and 2.5 per cent, respectively, pulling materials stocks into the red.

Activist shareholder Elliott Management expressed concerns over BHP's proposal to enter the over-supplied fertiliser market.

Fortescue Metals Group dipped as much as 3.5 per cent. An Australian court ruled against the company in claims made by indigenous Aboriginal groups over land in Pilbara region.

Primary Health Care Ltd bounced back up over a per cent after dropping as much as 5 per cent to its lowest in two months after downgrading its annual profit outlook to the lower end of its guidance.

New Zealand's benchmark S&P/NZX 50 index fell 4.57 points, or 0.06 per cent, to 7,667.87 by 0301 GMT.

The index was little changed as gains in healthcare and utility stocks outweighed losses in the materials sector.

Fletcher Building was among the biggest percentage decliners while Fisher and Paykel Healthcare was among the gainers.

REUTERS