(Adds analysis, quotes, stocks on the move)
SYDNEY, Sept 4 Australian shares fell 0.7
percent, retreating from 3-1/2 month highs on Wednesday, as
investors tread cautiously after the U.S. edged closer to
military action against Syria, but a rally in gold prices helped
Leading broadly-based losses were heavyweight stocks
including banks and financials.
BHP Billiton Ltd fell 0.9 percent while Rio Tinto
Ltd slipped 0.1 percent
Among banks, National Australia Bank lost 0.9
percent and Australia and New Zealand Banking Group
dropped 1 percent.
The S&P/ASX 200 index fell 37.9 points to 5,158.7 by
0157 GMT, snapping four consecutive sessions of gains. The
benchmark rose 0.2 percent on Tuesday to its highest close since
Risk appetite soured somewhat after key congressional
leaders John Boehner and Eric Cantor both pledged their support
for military action to punish President Bashar al-Assad for his
suspected use of chemical weapons against civilians.
"In a worst case scenario of escalating conflict in the
Middle East, higher risk premiums built into gold and oil prices
could see a rally in energy and gold mining stocks, while the
broader market falls," said Ric Spooner, chief market analyst at
CMC Markets, in a note to clients.
Also dampening investor sentiment was the looming general
election on Saturday, where the conservative opposition is
expected to oust the Labor government, adding a cautious tone to
trade during the week.
Top telecommunications company Telstra Corporation Ltd
fell 0.9 percent while consumer staple retailers
Woolworths Ltd and Wesfarmers Ltd lost 1.1
percent and 1.3 percent respectively.
However, a handful of gold miners edged higher, helping to
cap broader losses after bullion rallied to near 3-1/2-year
Regis Resources Ltd and Newcrest Mining Ltd
posted gains of 2.1 percent and 0.7 percent, eking out
a modest gain in the sector.
Data out on Wednesday showed Australia's economy grew 0.6
percent last quarter as modest gains in consumer and government
spending offset a very flat performance else where.
"The economy is still growing below trend, ongoing growth is
below 2.6 percent," said Stephen Walters, chief economist at JP
"It probably means the RBA still has to cut interest rates
at some point, but no compelling reason after this data to do
Australia's central bank kept interest rates steady at 2.5
percent at its policy meeting on Tuesday.
Perilya Ltd rocketed 43.2 percent to 7-month highs
of A$0.31 after Zhongjin Lingnan issued a proposal to acquire
Perilya at $0.35 per share, a premium to its current trading
Monadelphous Group Ltd climbed 2.8 percent to
A$19.74, a three-month high after the company secured a $235
million Cape Lambert port project in Western Australia.
Sentiment on the local bourse was helped slightly as U.S.
stocks edged higher on Tuesday, although they finished well off
New Zealand's benchmark NZX 50 index rose 0.1
percent to 4,612.7.
(Reporting by Thuy Ong; Editing by Eric Meijer)