* S&P/ASX 200 index up 0.1 pct
* Banks mixed, retailers up a touch; miners mostly down
SYDNEY May 6 Australian shares held steady in
subded trade on Tuesday morning, underpinned by modest gains in
consumer stocks, as investors looked ahead to the Reserve Bank
of Australia's policy-setting meeting later in the day.
Australia's big four banks reversed earlier gains, with
Commonwealth Bank of Australia nearly flat. Westpac
Banking Corp was the only one to hold gains, up 0.6
IG market strategist Evan Lucas said in a note that banks
were up earlier this morning after being sold off in the past
week, though the rebound lacked conviction.
Recent analysts' downgrades of some of the big banks and
concerns that earnings growth may not keep pace with the record
rally in stock prices triggered a wave of selling.
"Valuations, yield and growth are all hitting the limit at
the all-time highs...despite the fact the banks have had very
solid results, it's hard to see them breaching these levels,"
The S&P/ASX 200 index added 3.2 points to 5,465.4 by
0222 GMT. The benchmark eked out a slim 0.1 percent rise on
The market was supported by retailers. Supermarket chain
Woolworths Ltd rose 0.4 percent, and electronics
retailer JB Hi Fi Ltd gained 0.6 percent.
The absence of catalysts kept most investors sidelined as
they looked ahead to the Reserve Bank of Australia's (RBA)
policy decision, though it is considered almost certain to leave
the cash rate unchanged at 2.5 percent and maintain a steady
James McGlew, executive director of corporate stockbroking
at Argonaut, said investors were betting that the federal
government would not introduce a proposed levy to tax high
income earners to tacle a rising deficit.
Next week the coalition government will hand down its first
budget since winning the election in September last year, and
has already flagged a series of spending cuts.
"If it's going to be solved by income tax, the natural
reaction is for consumption to decrease," McGlew said. "Perhaps
there is a perception now that the government is going to be
looking elsewhere rather than these deficit levies they are
proposing at the moment."
Australian department store retailer David Jones Ltd
added 0.3 percent after posting a 4.1 percent rise in
third-quarter sales. It also said a takeover proposal from South
Africa's Woolworths Holdings Ltd has been approved by
Australia's foreign investment review body.
Miners were a drag on the market, with Rio Tinto Ltd
down 0.6 percent and Fortescue Metals Group
sliding 1.3 percent. BHP Billiton bucked the trend and
edged up 0.1 percent.
Elsewhere, rare earth producer Lynas Corp Ltd lost
3.0 percent after it said it would undertake a fully
underwritten share purchase plan to raise a minimum of A$30
million together with a placement to raise up to A$10 million.
New Zealand's benchmark NZX 50 index slipped 0.4
percent to 5,178.1.
(Reporting by Maggie Lu Yueyang; Editing by Richard Pullin &