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Australia shares flat as miners, financials drag; NZ slips

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Australia shares held a soft tone on Monday, as mining firms and financials eased while investors digested the drop in US markets amid escalating US-China trade tensions.

[BENGALURU] Australia shares held a soft tone on Monday, as mining firms and financials eased while investors digested the drop in US markets amid escalating US-China trade tensions.

The major US indices dropped between 2.2 per cent and 2.3 per cent on Friday after US President Donald Trump threatened to slap US$100 billion more in tariffs on Chinese imports.

However, E-Mini futures for the S&P 500 on Monday were up 0.5 per cent, while NASDAQ futures rose 0.7 per cent.

"I think local investors were a bit surprised at the depth of the sell-off from Friday night in the US," said Michael McCarthy, chief marketing strategist at CMC Markets.

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He added the announcement of an extra US$100 billion in sanctions was a negative for markets and the sell-off was a response to uncertainty.

The S&P/ASX 200 index slipped 0.1 per cent, or 4.1 points, to 5,784.6 by 0226 GMT. It was little changed on Friday.

Financials and materials were the biggest weights on the benchmark with mining major BHP the main index's biggest drag, down as much as 0.9 per cent. Rival Rio Tinto lost as much as 1.3 per cent to touch its lowest since Dec 20.

Among financials, National Australia Bank and fellow lender Australia and New Zealand Banking Group Ltd were down 0.6 per cent and 0.4 per cent, respectively, as the sector index slipped 0.2 per cent.

On Monday, mining infrastructure group Mineral Resources Ltd said it agreed to buy iron ore miner Atlas Iron via a scheme of arrangement, valuing Atlas at US$215.2 million.

After the deal was announced, Atlas Iron's shares zoomed as much as 47.4 per cent higher while those of Mineral Resources lost as much as 4.2 per cent.

"There is also a bid on the table for Santos, Beach Petroleum also under bid, so this is something we are certainly looking out for in current markets... it does show potential for improved valuation," said CMC Markets' Mr McCarthy.

Mr McCarthy added that Atlas' small market cap meant the deal was not a significant play overall but added to the resource sector theme of smaller companies being vulnerable to takeovers.

New Zealand's benchmark S&P/NZX 50 index fell 0.1 per cent, or 5.83 points, to 8,387.44, hurt by weakness in consumer staples and utilities.

a2 Milk Company Ltd lost as much as 3.4 per cent while Contact Energy Ltd was up to 0.8 per cent lower.

REUTERS