(Adds details, comments, stocks on the move)
SYDNEY May 2 Australian shares fell 0.7 percent on Thursday, dragged down by financials and miners as disappointing U.S. earnings reports and employment data added to broad concerns over the global economic recovery.
A large selloff in commodities hurt miners. Gold prices fell more than 1 percent on Wednesday, while copper also slid due to concerns over growth in the United States and top metal consumer China.
Heavyweight mining stocks BHP Billiton Ltd dropped 1 percent while rival Rio Tinto lost 1.4 percent.
"What we're seeing today is the material stocks lagging, pulling the market down, there's still no real conviction in the major mining stocks despite them being at pretty depressed levels," said Peter Esho, investment adviser at Wilson HTM Investment Group.
The S&P/ASX 200 index lost 37.2 points to 5,129 by 0017 GMT. The benchmark fell 0.5 percent on Wednesday.
BHP shares have fallen 14.2 percent to A$31.83 so far this year, while Rio Tinto has shed 17.8 percent to A$54.27.
"When copper prices bottom, we think, at around $3 a pound, that will be a signal for the material stocks on the Australian market," Esho said.
A recent string of disappointing data from the United States, Europe and China, Australia's biggest export market, have raised concerns about the global economic recovery and dulled investor enthusiasm for riskier stocks and commodities.
U.S. stocks fell sharply on Wednesday as the latest economic data continued a trend of indicators pointing to anaemic growth while bellwether companies disappointed on revenue.
Payrolls processor ADP reported Wednesday that private employers added 119,000 jobs in April, well below economists' expectations for 150,000 new jobs. A separate report form the Institute for Supply Management showed the U.S. manufacturing sector expanded only modestly in April.
The downbeat U.S. reports came on the heels of data showing growth in China's factory sector unexpectedly slowed last month as new export orders fell, raising fresh doubts about the world's second-largest economy after a disappointing first quarter. [nL3N0DI04Y
Financials also undermined the Australian market, with Westpac Banking Corp and top lender Commonwealth Bank of Australia losing 0.6 percent and 0.5 percent, respectively.
Some strength in the defensive sector helped to cap broader losses. Telecommunications giant Telstra Ltd added 0.6 percent to mark a fresh 8-year high of A$5.06, while Wesfarmers Ltd inched up 0.1 percent.
New Zealand's benchmark NZX 50 index fell 0.5 percent or 21.5 points to 4,581.5.
STOCKS ON THE MOVE
* GrainCorp Ltd tacked on 0.4 percent to A$12.86. Archer Daniels Midland Co on Wednesday said it completed due diligence on GrainCorp Ltd and intends to move forward with a cash offer to acquire the Australian grain handler.
* AGL Energy Ltd fell 3.4 percent to A$15.15 after the utility said its full year profit after tax is expected to be in the lower half of the guidance range of $590 million to $640 million.
* Flight Centre Ltd added 2.4 percent to a record-high of A$39.09 after the travel agent raised its full year underlying profit before tax expectation to $325 million to $340 million.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)