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Australia: Shares slip on banking inquiry, global trade woes; NZ down

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[BENGALURU] Australian shares slipped on Thursday as an inquiry into the country's scandal-ridden banking sector hit financial stocks, while simmering global trade tensions amid worries of fresh US import tariffs on China also dragged down sentiment.

Open economies relying heavily on free trade would have much to lose should US protectionism lead to tit-for-tat reprisals globally. Australia in particular is vulnerable as a producer of basic commodities used in the world supply chain.

Australia's S&P/ASX 200 index dropped 0.38 per cent to a one week-low, or 22.8 points, to 5913.1 by 0106 GMT. This tracked weakness in Wall Street shares, which fell for a third session overnight on intensifying fears of a trade war.

While a strength in material stocks helped put a floor under Australian shares, the country's financial index fell up to 1 per cent, with the 'Big Four' banks slipping by 0.8-1.1 per cent due to the inquiry.

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"The Commission is focusing on their behaviour and some of the headlines appear to be affecting investor sentiment despite the fact that most of these issues are already well-known," said Michael McCarthy, chief market strategist at CMC Markets, referring to the judicial inquiry into the banking sector.

"The spotlight now appears to be affecting trading and they're (banks) certainly underperforming," Mr McCarthy added.

National Australia Bank Ltd stated at the inquiry that a system of bonuses and incentives had encouraged bankers to engage in fraudulent lending practices to boost their incomes.

The bank's shares fell as much as 1 per cent on Thursday, extending losses into a third session.

However, Australia's material stocks offered a bright spot, rising as Chinese iron ore and coking coal futures rebounded from multi-month lows after strong economic data from China pointed to firm demand conditions in the world's No. 2 economy.

Top miners BHP Billiton and Rio Tinto rose as much as 0.8 per cent and 1.02 per cent, respectively.

Among industrial stocks, logistics company Brambles Ltd rose as much as 2.3 per cent, while Qantas Airways climbed 2.5 per cent to an almost four-month high.

New Zealand shares were marginally lower after data showed the economy grew at a slower-than-expected pace in the fourth quarter of last year, cementing expectations the central bank will hold interest rates for a prolonged period.

New Zealand's benchmark S&P/NZX 50 index edged 0.05 per cent lower or 4.560 points to 8428.070 Fletcher Building Ltd rose 3.2 per cent while Spark New Zealand Ltd fell around 4 per cent to a one-week low in intraday trade.

REUTERS