Australia shares edge higher on Wall St, retailers hit by downgrades

Mon Jun 9, 2014 10:25pm EDT

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By Thuy Ong and Gyles Beckford

SYDNEY/WELLINGTON, June 10 (Reuters) - Australian shares inched 0.3 percent higher on Monday, underpinned by blue-chips as Wall Street extended its run of record highs, though a slew of profit downgrades from retailers restrained buyers.

All 'Big Four' banks rose, with Commonwealth Bank of Australia adding 0.7 percent and Westpac Banking Corp climbing 0.6 percent. Despite a recent pull back in banking stocks following a record-run, the high-yielding sector continues to attract investors.

Furthermore, analysts at Macquarie Bank said Australian banks stand to benefit from the European Central Bank's easing steps last week that took its deposit rate into negative territory for the first time.

"This will have a positive impact on the regional banks, but is also likely to be positive for the majors from a funding perspective," the analysts said in a note.

"These sorts of central bank interventions can drive large downward movements in spreads, leading to margin improvement."

The S&P/ASX 200 index added 18.3 points to 5,482.3 by 0217 GMT. The benchmark rose 0.5 percent on Friday, but dipped 0.5 percent for the week. Australian markets were closed on Monday for the Queen's Birthday holiday.

The early impetus for Sydney came from Wall Street, where the Dow and S&P 500 ended at record highs again overnight as more deal news raised enthusiasm for stocks.

In the resource space, BHP Billiton Ltd and Rio Tinto Ltd gained 0.4 percent and 0.7 percent, respectively, as aluminium prices hit their highest in 9-1/2 months on declining inventories.

The retailer sector lost ground as a slew of companies issued profit downgrades. The Reject Shop Ltd sank 11.3 percent to A$8.13, its lowest point since December 2006 after saying it expects to report full year profit after tax of between A$14.5 million and A$15.5 million.

Pacific Brands Ltd slumped 8 percent to near 4-week lows of A$0.52 after lowering its underlying fiscal year 2014 EBIT forecasts.

NewSat Ltd dived nearly 15 percent as it cut its revenue forecasts for fiscal 2014 to be between A$30 million to A$33 million.

The New Zealand's benchmark NZX-50 index was marginally lower at 5,180.55.

The main mover was Australasian chemicals company Nuplex Industries Ltd which plunged more than 7 percent after it lowered its earnings guidance for the current year because of weak local markets, the effect of a high exchange rate, and restructuring costs. The stock pared its losses and last traded down 3.6 percent at NZ$3.24.

Trading on the NZX was briefly interrupted by technical issues.

(Editing by Shri Navaratnam)

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