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Australian shares edge lower as financials drag; NZ down

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[BENGALURU] Australian shares fell on Monday as losses in financials outweighed gains in material stocks, as the market looks ahead to an important week of data.

A series of weak economic data from Europe and China, Australia's largest trading partner, intensified global growth worries, although caution prevailed ahead of the US Federal Reserve's key policy meeting scheduled for the next two days.

The S&P/ASX 200 index fell 0.2 per cent, or 9.3 points to 5,592.7 by 0023 GMT. The benchmark dropped 1.1 per cent on Friday.

Financial stocks slid 1 per cent with the country's Big Four banks leading the losses. Australia and New Zealand Banking Group was down the most, about 2.4 per cent, while National Australia Bank fell 1.4 per cent.

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"We saw pretty strong pressure on financial stocks in US and European trading. There are concerns that changes to the global growth outlook would mean banks are likely to be less profitable and that is not surprising given the leverage that banks have to the overall economic cycle," said Michael McCarthy, chief strategist at CMC Markets and Stockbroking.

However, despite the global negative leads, mining stocks which are highly exposed to China were boosted by mining behemoth BHP Group, which added 1.4 per cent.

The miner announced a special dividend of US$1.02 per share and the completion of its off-market share buyback, as part of its promise to return US$10.4 billion to shareholders from the sale of its US shale business.

Shares of fellow miner Mineral Resources soared as much as 5.6 per cent to a near two-week high on the back of news after market hours on Friday that it had finalised an agreement to form a lithium joint venture with US-based Albemarle for US$1.15 billion.

"Overall we are looking at a negative tone to trading but the caution means we are unlikely to run away with it," Mr McCarthy added.

In other news, Australia's government forecast the strongest budget outlook in 10 years, possibly making room for tax cuts ahead of elections in less than six months.

New Zealand's benchmark S&P/NZX 50 index dropped 0.5 per cent or 41.19 points to 8,681.32, with the country's largest banks, subsidiaries of Australia's powerful lenders, leading the losses.

On Friday, the Reserve Bank of New Zealand said it was considering almost doubling the required capital banks would need to hold to bolster the financial system's capacity to handle any shocks.

Local shares of ANZ were down 3.9 per cent, while Westpac Banking Corp fell 1.3 per cent.

REUTERS