[SYDNEY] Australian shares slipped on Thursday despite a firmer start to the session, shrugging off overnight gains on Wall Street as weakness in financial and consumer staples sectors offset a rally in miners.

The S&P/ASX 200 index dipped 9.21 points, or 0.17 per cent, to 5,363.3 by 0245 GMT. On Wednesday, the benchmark bounced off a two-week low to end 1.5 per cent higher.

The index, which started on a positive note, tested a key resistance level of 5,400 in early trade but soon lost steam. The benchmark has breached that level only once before since August 2015.

"It has been a volatile and a wild ride," OptionsXpress analyst Ben Le Brun said. "There is no clear catalyst to get us above and beyond the key 5,400 level. Earnings growth has been sadly lacking."

Wesfarmers, the owner of Coles supermarket, was among the biggest loser on the index, down about 3 per cent with Morgan Stanley expecting the retailer to cut dividends. Australia's No 1 company by sales on Wednesday said it will write down US$1.6 billion, while flagging its worst yearly profit in two decades.

Rival Woolworths, which has already been struggling to boost sales, was down about 1 per cent.

In financials, insurer Suncorp was the biggest loser, down nearly 4 per cent after two broker downgrades, traders said. Insurance Australia Group was down 1.6 per cent while wealth manager AMP slipped 1.6 per cent.

The big banks were mixed with Commonwealth Bank and National Australia Bank down 0.11 and 0.76 per cent respectively. ANZ rose 0.83 per cent while Westpac was up 0.4 per cent.

Miners were in the black with BHP Billiton and Rio Tinto up 2.3 per cent and 0.6 per cent respectively. Fortescue climbed more than 2 per cent.

Wall Street rose robustly for a second straight session on Wednesday, helped by higher oil prices and investors becoming more comfortable with the prospect of an interest rate hike as early as next month.

New Zealand's benchmark S&P/NZX 50 index rose 0.4 per cent or 26.77 points to 6,934.81.

New Zealand unveiled its annual budget on Thursday, expecting to post a NZ$719 million (S$665.5 million) surplus in the year to June 2017.

REUTERS