Australian shares inch down on rotation from banks to miners

Tue Apr 9, 2013 9:39pm EDT

(Adds details, comments, stocks on the move)

SYDNEY, April 10 (Reuters) - Australian shares inched down 0.3 percent in late morning trade on Wednesday after a retreat in financials offset a rally in miners driven by higher iron ore prices, as investors switched out of banks into miners on stronger iron ore prices.

"You've got two forces at work today. We've got BHP and Rio which were up strongly overseas...so there is a slight rotation (out) of banks into resources," said Stuart Smith, private client advisor at Bell Potter Securities.

Australia's big four banks all retreated. Westpac Banking Corp posted the biggest percentage loss of 1.0 percent. The No. 1 lender Commonwealth Bank of Australia lost 0.7 percent.

"I think the reason for that move is the probable ramifications of the change in the superannuation laws that this government is wanting to promulgate," Smith said, referring to the Australian government's plan to tax annual income above

A$100,000 drawn from retirement accounts.

On the other hand, resources stocks look cheaper after being selling off earlier this year, said Credit Suisse equity strategist Damien Boey.

"They've become very cheap. People are looking for any sign of stability in world growth or China as maybe a sign to buy some of the cheaper stocks," Boey said, noting stabilising commodities prices also helped miners.

Global miners BHP Billiton Ltd and Rio Tinto Ltd jumped 2.5 percent and 3.0 percent respectively. Fortescue Metals Group gained 3.1 percent.

The benchmark S&P/ASX 200 index had lost 13.1 points to 4.963.7 at 0127 GMT, paring earlier gains among miners. The index jumped 1.5 percent on Tuesday, its largest single-day rise in three weeks.

Defensive stocks were mostly weaker, as supermarket chain Woolworths Ltd and rival Wesfarmers Ltd declined 1.4 percent and 1.1 percent respectively.

A measure of Australian consumer confidence fell in April to end three months of solid gains, a reminder of how brittle the mood can be despite low interest rates and a brighter global background.

Blood products maker CSL Ltd lost 1.8 percent, and the country's biggest phone company Telstra Corp Ltd dropped 1.1 percent.

Energy stocks were mixed, with gas explorer Woodside Petroleum Ltd down 1.0 percent and Origin Energy Ltd inching up 0.2 percent.

New Zealand's benchmark NZX 50 index rose 0.4 percent or 17.6 points to 4,412.8.

STOCKS ON THE MOVE

* Billabong International Ltd plunged 26.0 percent to A$0.54, after the struggling surfwear maker said it was in talks over a takeover proposal valuing it at around $300 million, 45 percent lower than indicative offers.

Billabong shares, which had been on a trading halt since last week, fell to an all-time low of A$0.51 in the morning.

(0125GMT)

* Beach Energy Ltd gained 3.2 percent to A$1.47, after the oil explorer said it signed major gas sales agreement with Origin Energy.

(0122GMT)

* Leighton Holdings Ltd dropped 0.8 percent to A$19.94, after the company said its contract with BHP Billiton has terminated two years early as the global miner cuts costs amid a weak market.

(0120GMT)

(Reporting by Maggie Lu Yueyang; additional reporting by Michael Sin; Editing by Eric Meijer)