(Adds details, comments, stocks on the move)
SYDNEY, Dec 31 Australian shares fell 0.4
percent in a shortened session on Monday ahead of the New Year's
Day holiday, with big miners and banks losing ground as
investors awaited the outcome of U.S. budget talks.
The Australian market has risen 14.7 percent in 2012,
although it lost steam on the last day of the year with all eyes
on the U.S. fiscal deal.
A total of $600 billion in tax hikes and automatic cuts to
government spending will start kicking in on Tuesday - New
Year's Day - if U.S. politicians cannot reach a deal. Economists
fear the measures will push the U.S. economy into a recession.
"I imagine some deal will be done, but the problem will be
the impact on confidence," said Damien Boey, an equity
strategist at Credit Suisse.
The benchmark S&P/ASX 200 index fell 19.4 points to
4,651.9 at 0028 GMT. It rose 0.5 percent to 4,671.3 on Friday,
its highest close since June 2, 2011.
Although iron ore prices had jumped to seven-month high, a
weaker U.S. economy could bite into the gains in commodities,
"If you've got a weaker American economy because taxes have
gone up and confidence is down, what you will find is that the
key driver of commodities prices, which is the Chinese economy,
will not actually be able to sustain strong growth," he said.
Among the top miners, BHP Billiton Ltd lost 0.5
percent and Rio Tinto Ltd was down 0.7 percent.
Major banks all traded lower, led by a 0.8 drop in Westpac
New Zealand's benchmark NZX 50 index fell 0.4
percent to 4,066.5. It has risen 24.2 percent for the year.
Both the Australian and New Zealand markets will have
shortened sessions on New Year's Eve.
STOCKS ON THE MOVE
* Shares in Fairfax Media Ltd jumped 5.7 percent
after a consortium of allies of shareholder Gina Rinehart
purchased a small holding to add to the mining mogul's stake.
* Sundance Resources Ltd soared 17.2 percent after
media reports said China's Hanlong Group would finalise its
takeover by March 1.
(Reporting by Maggie Lu Yueyang; Editing by John Mair and Ryan