Australia shares eke out modest gain on US hopes; weak metals cap
(Adds analysis, quotes, stocks on the move)
SYDNEY Oct 2 (Reuters) - Australian shares edged 0.1 percent higher on Wednesday morning as investors were cautiously optimistic that the U.S. government shutdown would be short-lived, though a fall in metals prices and weak trade data kept most investors sidelined.
The S&P/ASX 200 index rose 6.1 points to 5,212.9 by 0150 GMT, snapping two sessions of losses after the benchmark tested the 5,300 point level last week. The benchmark slipped 0.2 percent in volatile trade on Tuesday.
"I think the market is going to trade relatively sideways until there's a decision out of the U.S.," said Jonathan Fyfe, investment adviser at Wilson HTM Investment Group.
"I don't think any serious fund managers or investors will take a big commitment to the market until they know what's actually happening."
The Democratic-led U.S. Senate on Tuesday voted to kill Republicans' latest attempts to modify an emergency government funding bill, stripping proposed amendments from the spending bill and sending back to the House a "clean" bill that would fund government agencies until Nov. 15.
The Australian bourse took its cue from Wall Street, which kicked off a new month and a new quarter with gains on Tuesday as investors, for now, appeared confident that the first partial government shutdown in nearly two decades would be brief.
Banks and insurance companies supported the market as investors looked to their high dividend yields. The Commonwealth Bank of Australia added 0.6 percent while Australia and New Zealand Banking Group rose 0.3 percent.
The big four banks have high dividend yields averaging 5.1 percent, compared to the 3 percent to 4 percent for average depositor accounts.
Suncorp Group Ltd, which has a dividend yield of 4.3 percent, tacked on 0.5 percent.
Big-cap miners kept the broad market gains in check after copper fell to its lowest in a week as the U.S. government shutdown ignited concerns about the world's largest economy and sparked a wave of fund and institutional selling.
BHP Billiton Ltd and Rio Tinto Ltd fell 0.7 percent and 1.1 percent respectively. Gold producers Newcrest Mining Ltd and Medusa Mining Ltd dropped 4.3 percent and 3.5 percent after bullion sank nearly 3 percent to its lowest level in almost two months.
Adding to the cautious mood, data released from the Australian Bureau of Statistics showed a trade deficit of A$815 million, compared with a projected deficit of A$450 million.
"Essentially, October is a seasonally weak period for stocks globally, and there is technical evidence the uptrend in the U.S. and Australian stocks is weakening," said Tim Radford, global analyst at Rivkin Securities in a note to clients.
New Zealand's benchmark NZX 50 index rose 0.3 percent to 4,760.3.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)
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