Australia shares fall 0.7 pct on looming election, big trade deficit
SYDNEY, Sept 5
SYDNEY, Sept 5 (Reuters) - Australian shares fell 0.7 percent on Thursday, pulling back from an earlier rise, on the back of broad sell-offs in miners and banks as investors turned cautious ahead of Saturday's national elections, and a worse-than-expected trade deficit further dampened sentiment.
Australia posted a trade deficit of A$765 million in July, compared with an expected balanced position.
The S&P/ASX 200 index took its lead from positive news overnight at the open but pulled back soon after, and had lost 34.7 points to 5,126.9 by 0143 GMT. The benchmark fell 0.7 percent on Wednesday.
Australia is heading into an federal election in two days, with polls indicating a decisive defeat for Prime Minister Kevin Rudd's Labor government.
"Politics is at the forefront of most traders' mind today. We are expecting volumes to be reasonably light over the next couple of days," said James McGlew, executive director of corporate stockbroking at Argonaut in Perth. "We certainly haven't gathered the momentum that we saw with US stocks."
U.S. stocks rose for a second day on Wednesday as a possible military action in Syria was seen as limited and strong auto sales lifted investor confidence in the U.S. economy.
Investors were also held back by a series of news events such as Bank of Japan's policy outcome and the U.S. nonfarm payrolls on Friday, analysts said.
"After a recent good run in the local market, this has been a very good excuse for investors to take profit off the table and see how the rest of the week plays out before being a bit more decisive next week," said IG market strategist Stan Shamu in Melbourne.
Global miner BHP Billiton Ltd dropped 1.0 percent, while smaller rival Rio Tinto Ltd lost 1.1 percent.
Newcrest Mining Ltd edged down 0.8 percent, as it completed an independent review of its disclosure practices.
Other names in the gold sector were hit harder after bullion prices fell 1.5 percent on Wednesday. St Barbara Ltd and Oceanagold Corp plunged 7.3 percent and 6.0 percent respectively.
Most banks traded lower. Top lender Commonwealth Bank of Australia slipped 0.5 percent while National Australia Bank was flat.
Insurance Australia Group Ltd dropped 4.8 percent as it traded ex-dividend.
Discovery Metals Ltd surged 7.7 percent after it responded to a regulatory query on its price volatility. The company said it remained in discussions over a refinancing proposal.
New Zealand's benchmark NZX 50 index slipped 0.2 percent to 4,601.9.
(Reporting By Maggie Lu Yueyang; Editing by Eric Meijer)
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