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SYDNEY, April 4 (Reuters) - Australian shares dropped 0.9 percent on Thursday, pulled down by weaker commodities' prices and broader concern over rising tensions on the Korean peninsula.
Strong Australian retail and building data failed to lift the market, as the startling numbers led investors to further lengthen the odds of any more cuts in interest rates this cycle.
"It (the market) tried half-heartedly to rally after some very strong February building approval and retail sales numbers, but could not sustain the goodwill," said Chris Weston, chief market strategist at IG Markets in Melbourne.
Weston also noted that traders have been discussing a large sell order being executed through the market by a fund.
Copper fell to an eight-month low overnight, pushing speculators to take more short positions ahead of a two-day holiday in China, and oil was down most in five months on Wednesday as U.S. inventory rose to its highest since 1990.
Developments on the Korean peninsula added to investor worries, said Martin Lakos, a division director at Macquarie Bank. "We saw that from VIX in the U.S. The volatility index was up another 1.5 points, so still fairly low, but over 14 now," he noted.
The S&P/ASX 200 index lost 44.2 points to close at 4,913.5, according to the latest data. The benchmark dropped 0.6 percent on Wednesday.
New Zealand's benchmark NZX 50 index ended 0.4 higher at 4,430.2.
Australia's big four banks all pulled back, with Westpac Banking Corp posting the biggest loss of 1.2 percent. Top lender Commonwealth Bank of Australia gave up earlier gains and declined 0.5 percent.
Despite the sell-off, some analysts still believe miners look attractive in the longer term.
"I think it's just more the short-term profit taking and also near-term concerns that have driven the weakness," said CommSec economist Savanth Sebastian in Sydney. "The Chinese growth story is going to be a big driver. Resource stocks will be well bid."
Global miners BHP Billiton Ltd and Rio Tinto Ltd dropped 1.5 percent and 1.4 percent respectively. Fortescue Metals Group Ltd ended down 3.3 percent.
Gold stocks were hit hard after bullion dropped to a ten-month low, with the world's No 3 gold miner Newcrest Mining Ltd dropping 5.2 percent.
"We had a big bubble-play over the last couple of years, and that turned gold into a safe haven, but people start to lose faith in the fact that there is a real safe haven there," said Jonathan Preston, an analyst at City Index in Sydney.
Junior gold miners Silver Lake Resources Ltd and Discovery Metals Ltd dived 16.8 percent and 13.9 percent respectively, making them the biggest percentage losers in the index.
Energy stocks were hit by weaker oil prices, with Australia's biggest oil producer Woodside Petroleum Ltd losing 0.7 percent and the smaller Origin Energy Ltd down 2.7 percent.
Some consumer staples advanced, with supermarket chain Woolworths Ltd gaining 0.9 percent and home furnishing retailer Harvey Norman Holdings Ltd jumping 2.5 percent.
Australia's Fairfax Media dropped 1.6 percent after the company said it is reorganising its business into five divisions to streamline its structure, focus on digital content and cut costs.
Reporting by Maggie Lu Yueyang and Michael Sin; Editing by Eric Meijer