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Australia: Shares off on fears of protracted trade war; New Zealand edges up

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[BENGALURU] Australian shares slipped on Wednesday as investors worried that the lack of progress in talks between the United States and China could signal a protracted trade war and harm the Australian economy.

The S&P/ASX 200 index fell 18.3 points or 0.3 per cent to 6,481.8 at 0106 GMT. The benchmark rose 0.4 per cent on Tuesday.

China is Australia's biggest trading partner and the negative impact of the trade war on the Chinese economy could harm demand for Australian products.

"There is a lot of posturing and chest beating from US President Donald Trump and it just makes it hard to really get a feeling in the market. Investors are just not convinced," said Damian Rooney, director of equity sales at Argonaut.

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"Chinese leader Xi Jinping saying they were starting on a new 'Long March' doesn't really sound like a quick fix," he added.

President Xi Jinping called for a new Long March in a speech at Jiangxi, where Mao Zedong began his ascent to power during a series of retreats by the Red Army to evade pursuing Nationalist forces, state media reported.

Investors took it as a sign that China is preparing for a protracted trade war, with no clear path to a trade deal in the near future.

Financials fell 0.8 per cent after a near 8 per cent rally over the previous two sessions.

Commonwealth Bank of Australia and Australia and New Zealand Banking Group each fell 0.9 per cent.

Lenders were also hit after Australia's financial regulator said it may impose additional capital requirements on some financial institutions after it found weakness in their ability to self-assess non-financial risk.

Miners fell 0.5 per cent despite record high iron ore prices. Fortescue Metals Group fell as much as 9 per cent as its shares traded ex-dividend.

Mining giant BHP Group and rival Rio Tinto fell as much as 0.8 per cent and 0.5 per cent, respectively.

Gold stocks slipped nearly 1.2 per cent. Top miner Newcrest Mining fell as much as 1.2 per cent while Northern Star Resources shed 1.8 per cent.

Offsetting losses on the index, property and building material manufacturers continued to rise, boosted by Australia's prudential regulator easing lending criteria for home loans.

James Hardie rose 2.4 per cent, Adelaide Brighton added 6.1 per cent while property developer Stockland Corporation tacked on 3.3 per cent. Boral gained 1.4 per cent.

New Zealand's benchmark S&P/NZX 50 index rose 0.1 per cent or 10.78 points to 10,226.87.

Utilities provider Infratil rose 6.4 per cent while dairy giant a2 Milk Company edged higher.

REUTERS