Australia shares down on Fed, mixed earnings; China PMI offers modest relief
(Adds analysis, quotes, stocks on the move)
SYDNEY Aug 22 (Reuters) - Australian shares were down 0.5 percent on Thursday morning, as relief from an upbeat Chinese manufacturing report wasn't enough to offset a mixed bag of earnings and minutes from the U.S. Federal Reserve's last meeting, which failed to allay concerns of an imminent reduction in stimulus.
A handful of big cap miners dragged on the market after copper fell overnight on a strengthening U.S. dollar.
BHP Billiton Ltd and Rio Tinto Ltd fell 0.8 percent and 0.4 percent respectively. However, Fortescue Metals Group Ltd rallied 3.7 percent after the iron ore company reported a 21 percent on-year rise in revenue to $8.1 billion compared to last year.
"With earnings season at or over the hump it's likely the market will ease off over the next few weeks as investors take profits," said Chay Flack, equities dealer at CMC Markets Stockbroking in a note to clients.
The S&P/ASX 200 index fell 37.4 points to 5,062.6 by 0259 GMT, recovering slightly from the session's lows after a preliminary China HSBC Purchasing Managers' Index report showed manufacturing in Australia's largest export market hit a four-month high in August..
Global markets hard hit overnight after the Fed's minutes suggested a reduction to its massive stimulus could yet start as early as next month.
The Australian benchmark, which closed 0.4 percent higher on Wednesday, has outperformed emerging markets in the region, losing 1.6 percent so far this week compared with the 5.1 percent drop in the Thomson Reuters South East Asia Index. .
Markets from India to Indonesia have suffered heavy selloffs recently on expectations Western investors will repatriate funds now that yields at home are rising.
"Regionally we're viewed as being more defensive than say India or China," said Damien Boey.
"A lot of these economies, like Indonesia, India, are in some way shape or form linked to the U.S. and they're very heavily exposed to the tapering that the Fed is potentially going to do."
Other big earnings-related movers included Origin Energy, which jumped 6.2 percent to 2-month highs of A$13.03 after reporting a full-year underlying profit of $760 million.
On the downside, Atlas Iron Ltd tumbled 6.5 percent to a two-week low of A$0.87 after it reported underlying profit after tax of $14 million versus $72 million the previous year.
Pallet maker Brambles Ltd also lost 5.1 percent to trade at a 3-1/2 month low of A$8.72 despite posting a rise in full year net profit of 11 percent. Shares in Brambles have climbed 22 percent this year, against a 10 percent rise in the broader market.
Financials also weighed on the market, with Westpac Banking Corp shedding 0.9 percent while Australia and New Zealand Banking Group lost 0.8 percent. The banking sector, led by the "big-four" banks, has outperformed the broader market this year, partly boosted by strong earnings and high dividend yields.
New Zealand's benchmark NZX 50 index slipped 0.5 percent to 4,527.5.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)