Australian shares lose A$44b in value as global risks hammer sentiment

[BENGALURU] Australian shares dropped more than 2 per cent on Thursday, losing about A$44 billion (S$40.82 billion) in value, as Washington's move to slap tariffs on Europe and weak US data added to escalating fears over slowing global economic growth.

The S&P/ASX 200 index dived 2.2 per cent, or 146.9 points, to 6,493, its lowest close in over a month.

Overnight, the United States said it will slap tariffs on US$7.5 billion worth of goods from the European Union, threatening to spark a transatlantic trade war as global markets grapple with the more than year-long US-China trade tussle.

Also originating from the United States was two straight days of weak data - in the form of manufacturing and private jobs figures - with investors now awaiting Friday's non-farm payrolls for further clues about the health of the world's largest economy.

"Numbers out of the US need to improve in the next couple of months for investors to feel more confident that a recession is not around the corner," said Michael Gable, the managing director at Sydney-based Fairmont Equities.

Concerns about the state of the world economy led to a broad selloff in Australia, with gold stocks the only bright spot as investors sought safe-havens.

Just 15 out of the 200 stocks on the benchmark ended the session in positive territory, with financial stocks dominating losses.

The Big Four banks were among the top drags, with National Australia Bank (NAB) losing 3.5 per cent. The other three closed between 2.4 per cent and 2.8 per cent lower.

Morgan Stanley downgraded NAB, and warned that all the major banks should lower their payout ratios and target higher capital levels instead.

Energy and mining stocks were also among top losers on sustained weakness in oil prices and commodities.

Global miners BHP Group and Rio Tinto slumped 3.2 per cent and 4.2 per cent.

Gold stocks saw support on safe-haven buying, with Newcrest Mining up 2.8 per cent.

Elsewhere, agricultural firm Webster Ltd surged 54 per cent to a near 16-month high after it received an A$854 million takeover offer from shareholder PSP Investments.

New Zealand's benchmark S&P/NZX 50 index dropped 1.2 per cent to two-week lows of 10,821.21.

Local listings of Australia and New Zealand Banking Group Ltd and Wesptac slumped.

However, Fonterra Shareholders Fund was among the few bright spots on the index, rising 4.3 per cent.

REUTERS