Australia shares edge lower as offshore markets retreat

Thu May 15, 2014 10:31pm EDT

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* Banks lose ground after recent record highs

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By Maggie Lu Yueyang

SYDNEY, May 16 (Reuters) - Australian shares slipped on Friday, tracking a pullback in Wall Street stocks, with investors eyeing potential offshore risks including a slowing Chinese economy and the Ukraine crisis in the absence of major local catalysts.

Banks weighed on the market, with top lender Commonwealth Bank of Australia losing 0.8 percent after touching a record high the previous day. Australia and New Zealand Banking Group shed 0.7 percent and Westpac Banking Corp fell 0.6 percent as both stocks traded ex-dividend.

"Given the fact most of them have already traded ex-dividend - interest might be limited in the near term, until they return to more appealing levels," said Stan Shamu, market strategist at IG.

The S&P/ASX 200 index was down 0.5 percent or 26 points at 5,484.2 as of 0144 GMT, after rising 0.3 percent to a two-week high on Thursday. It is up 0.4 percent on the week.

The benchmark struck a near six-year high of 5,554.5 points on April 29, but has drifted sideways in a narrow range this week as economic events and a handful of corporate results offered no major surprises.

Investors in equities have a long list to worry about including the market being overvalued, the end to U.S. monetary stimulus and a slowdown in China, Tim Radford, global investment manager at Rivkin Securities, said in a note to clients.

"At the moment, there isn't much to be positive about," Radford said. "The biggest near-term concern is the fact U.S. equity markets haven't had a large scale correction in over two years, with stocks losing momentum fast."

Among notable movers, SGF Australia rocketed 21.2 percent to A$0.885, its highest point since May 2002, after agreeing to a takeover by larger financial services rival IOOF Holdings Ltd for about A$670 million. IOOF rose 2.1 percent.

Toll road operator Transurban jumped 1.4 percent to a five-week high of A$7.36 after credit ratings agency Moody's affirmed its BAA1 rating and revised the outlook to stable from developing, after the company successfully completed a capital raising to fund its acquisition of Queensland Motorways.

Elsewhere, Leighton Holdings Ltd said it is still in advanced negotiations regarding the settlement of a shareholder class action, and a settlement has not yet been signed. Leighton shares were down 1.3 percent.

Goodman Fielder Ltd said it will consider a fresh A$1.37 billion takeover offer from Wilmar International and First Pacific Co. Shares in the Australian food company slipped 0.3 percent.

New Zealand's benchmark NZX 50 index fell 0.4 percent to 5,175.6. (Reporting by Maggie Lu Yueyang, additional reporting by Thuy Ong; Editing by Chris Gallagher)

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