Australia shares flat in choppy trade, investors eye RBA rate meeting
(Adds analysis, quotes, stocks on the move)
SYDNEY Oct 1 (Reuters) - Australian shares remained flat in choppy trade on Tuesday after Wall Street fell overnight on looming U.S. fiscal deadlines, but the local market was buoyed by better-than-expected retail sales data and a slight uptick in the official China PMI.
Banks reversed early losses to trade higher, with Commonwealth Bank of Australia climbing 1 percent while National Australia Bank added 0.4 percent.
Australian retail turnover rose 0.4 percent in August, slightly better than the 0.3 percent forecast by analysts.
The S&P/ASX 200 index rose 6.6 points to 5,225.5 by 0142 GMT. The benchmark slid 1.7 percent from five-year highs on Monday.
The industrials sector also helped support the market after China's manufacturing growth edged up slightly in September, but gains were capped as the reading came in below expectations, adding to worries that economic recovery in China has floundered.
"This report could be quite pivotal for the direction of trade in the second half of the day," said Steven Daghlian, market analyst at Commonwealth Securities.
Industrials including Brambles Ltd jumped 2.5 percent while Leighton Holdings Ltd added 0.5 percent.
The local index was dampened by Wall Street which closed lower on Monday, just hours before a midnight deadline to avert a federal government shutdown.
Oil producers slid to cap broader gains after crude oil on both sides of the Atlantic fell overnight. Woodside Petroleum Ltd slid 1.7 percent while Oil Search Ltd tumbled 2.2 percent.
Insurance companies also lost ground with Suncorp Group Ltd slipped 0.2 percent while QBE Insurance Group Ltd fell 0.4 percent.
The U.S. Congress, still in partisan deadlock on Monday over Republican efforts to halt President Barack Obama's healthcare reforms, was on the verge of shutting down most of the U.S. government starting on Tuesday morning.
"It seems most investors have started to resign themselves to the fact that the government is likely going to shut down," said Tracey Warren, stockbroking business development manager at CMC Markets Stockbroking.
"A prolonged shut down could have a major impact on confidence and on the U.S. economy."
Investors were also cautious ahead of the Reserve Bank of Australia's monthly policy meeting later in the day, where it is considered almost certain to decide against cutting interest rates from the current record low 2.5 percent.
Dealers said investors would be eyeing the tone of the statement for underlying dovish rhetoric.
New Zealand's benchmark NZX 50 index slipped 0.2 percent to 4,727.7.
Elsewhere, the New Zealand government said it will pump up to NZ$155 million into Solid Energy New Zealand Ltd and private lenders will swap some debt for equity under a plan to save the troubled coal miner, which is slated for partial privatisation.
(Reporting by Thuy Ong; Editing by Eric Meijer)
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