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Australian shares finish flat as bluechip gains beat back trade war blues

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[BENGALURU] Australian shares ended stable on Friday, as investors switched to blue chips and safe-haven gold stocks with broader equity markets rattled by fears that US President Donald Trump's aggressive trade diplomacy could lead to recession.

Mr Trump took markets by surprise on Thursday by threatening to slap a 5 per cent tariff on goods from Mexico, and increase them to as high as 25 per cent unless more was done to stop the flow of illegal immigrants into the United States.

The S&P/ASX 200 index ended the session 4.80 points higher at 6,396.90. The benchmark marked its fifth straight month of gains but lost over 1 per cent this week, giving up some of last week's election surprise and iron ore-driven gains.

"When you have got Asian worries, emerging market worries, money tends to run out of China and emerging markets into Australia... They tend to buy the large caps," said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.

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Mining behemoth BHP Group Ltd, Commonwealth Bank of Australia and pharma giant CSL Ltd - Australia's first, third and fifth largest stocks by market capitalisation - all closed higher.

Large cap industrials also saw buying activity, with toll road operator Transurban Group and Sydney Airport Holdings Pty Ltd gaining 1.8 per cent and 1.2 per cent, respectively.

The sub-index for gold stocks jumped over 2.6 per cent to its best close since February, basking in its safe-haven appeal enhanced in times of global uncertainty.

Gold miner Newcrest Mining Ltd ended at its best level since 2012.

In other mining news, rare earths miner Lynas Corporation Ltd finished at an over five-year high on a double-whammy of positive leads.

Malaysian Prime Minister Mahathir Mohamad said on Thursday Lynas will be allowed to keep running its local processing plant for rare earths, used in everything from headphones to defence products

The share had risen 15 per cent on Wednesday after media in China, the biggest exporter of rare earths, reported that Beijing was ready to retaliate in its trade war with the United States by curbing supplies of the materials.

Oil and gas stocks lost the most, ending 1.4 per cent lower, Santos Ltd, Woodside Petroleum Ltd and Oil Search Ltd ended between 1 per cent and 1.6 per cent lower.

New Zealand's benchmark S&P/NZX 50 index rose 0.5 per cent to close at 10,117.99.

Auckland International Airport Ltd closed 1.7 per cent higher while dairy giant a2 Milk Company rose 1.2 per cent.

REUTERS