Australia shares hit 3-1/2 mth lows on auto industry woes, Fed concerns
(Adds analysis, quotes, stocks on the move)
SYDNEY Dec 12 (Reuters) - Australian shares slipped 1 percent to 3-1/2 month lows on Thursday morning as renewed concerns of an imminent reduction in U.S. monetary stimulus and local manufacturing woes hurt sentiment.
Wednesday's news that General Motors Co would stop making cars in Australia by 2017 due to high costs and a cripplingly strong currency took the shine off a strong jobs report.
GM's exit has fueled fears rival Toyota Motor Corp will follow suit and put the entire local autos industry at risk.
"The Australian market is experiencing negative sentiment in the wake of Holden's exit and the impact it will have on jobs," said Chay Flack, equities dealer at CMC Markets Stockbroking in a note.
"The vacuum created by Holden will be felt for months and its impact won't be seen in economic numbers until January.
The subdued mood offset positive news on the jobs front. Australian employment increased by 21,000 in November to handily beat expectations, lifting the local dollar and helping soften the blow of planned job losses in the auotmaking industry.
The S&P/ASX 200 index declined 31.2 points to 5,073.1 at 0134 GMT, its lowest point since August 29. The benchmark fell 0.8 percent on Wednesday.
Overnight, U.S. stocks suffered their biggest fall in a month as trader locked in recent gains after a provisional budget deal in Washington removed one of the near-term reasons for the Federal Reserve to continue its current pace of economic stimulus.
Top-tier banks Westpac Banking Corp fell 0.9 percent and Australia and New Zealand Banking Group lost 1.5 percent.
The resources sector was also hit by a drop in metals prices. BHP Billiton Ltd and rival Rio Tinto Ltd each lost 1.6 percent as Shanghai steel rebar futures eased, hurt by worries over tepid demand.
Bullion miner Newcrest Mining Ltd dropped 1.3 percent, while Medusa Mining Ltd declined 4 percent after gold prices fell after the tentative U.S. budget deal strengthened the case for an earlier tapering of Fed stimulus.
Elsewhere, financial company Crowe Horwath Australasia Ltd said challenging conditions have persisted, and reduced its earnings forecast by A$5 million. Shares in the company plunged 30.4 percent to 14-year lows.
Energy concern Envestra added 1.6 percent after issuing a profit upgrade to A$145 million.
New Zealand's benchmark NZX 50 index slipped 0.2 percent to 4,696.4.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)
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