Australia: Shares lag on soft banks, NZ stocks at 2-month peak

[SYDNEY] Australian shares dipped on Wednesday for the second consecutive session, with banks under pressure after the government supported stronger capital reserves, but demand for mining stocks limited the market's downside.

The S&P/ASX 200 index fell 0.6 per cent, or 30.774 points, to 5,204.5 by 0207 GMT, pulling away from a 7-week high touched last week.

The index is up around 4 per cent in October so far, but still down more than 12 per cent from a high of nearly 6,000-points hit earlier this year.

Worries about a slowdown in China, Australia's key export market, and uncertainty over the timing of a rate hike by the US Federal Reserve have weighed on the index for much of the year.

The big banks, including National Australia Bank, Commonwealth Bank of Australia and Westpac Banking Corp , skidded more than 1 per cent, while Australia & New Zealand Bank eased 0.8 per cent.

Much of the weakness came after the government accepted most key recommendations of an inquiry on the nation's financial system including one that called for the country's top four banks to increase their capital ratios.

Healthcare stocks also slipped with Ramsay Health Care leading losses with a 2 per cent drop after a recent rally to a seven-week peak ran out of steam.

Natural resources shares, however, eased the index pain with miner Fortescue Metals Group up 3.4 per cent, nearing a recent four-month peak.

Mining giant BHP Billiton edged up 0.2 per cent after it maintained full-year guidance of iron ore production.

Rio Tinto 's shares were up 0.6 per cent.

For more individual stocks activity click on The rally in New Zealand stocks showed no signs of losing steam with the S&P/NZX 50 index on track to close higher for a ninth straight session.

The benchmark was last 0.2 per cent, or 9.84 points, higher at 5,905.33 , having touched a fresh two-month high during the session. The index has amassed gains of over 5 per cent in two weeks.

Buyers appeared to have returned with a vengeance after two disappointing quarters that saw the index shed a total of 4.1 per cent - its worst performance since late 2011.

With expectations for at least another cut in official interest rates, analysts said there is still value to be found in the stock market.

Among the gainers on Wednesday, property developer Fletcher Building climbed 2.1 per cent, telecommunications infrastructure company Chorus advanced 1.6 per cent and medical device maker Fisher & Paykel Healthcare put on 1.3 per cent.

REUTERS