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Australian shares lower on banks after capital requirements; New Zealand falls

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[BENGALURU] Australian shares slipped on Tuesday as banks fell on new capital requirements for the sector, outpacing miners buoyed by a positive outlook for iron ore prices.

The S&P/ASX 200 index weakened 0.3 per cent or 18.6 points to 6,653.6 by 0214 GMT. The benchmark dropped 1.2 per cent on Monday.

The Australian Prudential Regulation Authority (APRA) said on Tuesday it will raise capital requirements for banks by 3 percentage points of risk-weighted assets.

The increase was less than originally proposed, but investors pushed shares of the Big Four banks down 0.5-0.9 per cent.

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"Banks will get no respite from the final rules, as more expensive capital instruments replace senior unsecured issuance," Fitch Ratings said in a note.

Investors avoided risk assets ahead of US Federal Reserve Chairman Jerome Powell's testimony on Wednesday and Thursday, which could provide further clues on monetary policy.

Solid US job growth in June has reduced expectations that the Fed will cut interest rates by 50 basis points when it meets at the end of July.

That has also weighed on gold prices, putting pressure on Australian miners.

Newcrest Mining dropped to more than a one-week low and was on track for its third straight losing session.

Healthcare stocks also declined, with Australia's largest drugmaker CSL down 1 per cent.

The benchmark's slide was restrained by iron ore miners.

Rating agency S&P raised its iron ore price forecasts for 2019, 2020 and 2021 as it expected a prolonged hit to supply from the Vale dam disaster in January.

Fortescue Metals Group, whose stock has more than doubled in 2019, was trading 1.8 per cent higher.

Mining giant BHP Group saw its best day in nearly two weeks, while peer Rio Tinto posted its biggest intraday gain since July 2.

In New Zealand, broad-based losses pushed the benchmark S&P/NZX 50 index 0.6 per cent or 60.96 points lower to 10,545.02.

Banks were under pressure on this side of the Tasman Sea as well, with local-listings of Westpac Banking and Australia and New Zealand Banking Group down 0.7 per cent and 0.6 per cent, respectively.

REUTERS