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3 years ago
Australia shares step back from sharp rally; investors eye Iraq, gold surges
June 20, 2014 / 2:41 AM / 3 years ago

Australia shares step back from sharp rally; investors eye Iraq, gold surges

4 Min Read

* S&P ASX/200 dips 0.4 pct, banking sector drags

* Gold surges 3 pct overnight to buoy some miners (Adds analysis, quotes, stocks on the move)

By Thuy Ong and Naomi Tajitsu

SYDNEY/WELLINGTON, June 20 (Reuters) - Australian shares stepped back on Thursday after posting their biggest one-day gain in six months in the previous session, with the crisis in Iraq putting a bit of a dampener although a surge in gold helped to contain broad market losses.

President Barack Obama said on Thursday he was sending up to 300 U.S. military advisers to Iraq but stressed the need for a political solution to the Iraqi crisis as government forces battled Sunni rebels for control of the country's biggest refinery.

The financial sector was the biggest drag on the market. Commonwealth Bank of Australia, the biggest bank by market capitalisation, lost 0.5 percent, and Westpac Banking Corp declined 0.4 percent.

The S&P/ASX 200 index fell 27.2 points, or 0.5 percent, to 5,441.0 by 0235 GMT. The benchmark surged 1.6 percent on Thursday, its biggest one-day percentage gain since December 19, spurred by the U.S. Federal Reserve's upbeat assessment of the economy and a commitment to keep rates low for some time to come.

For the week, the market is on track to add 0.7 percent.

A handful of defensives also pulled back, led by top telecommunications provider Telstra Corporation Ltd falling 1 percent.

"I think a bit of moderation today is not a terrible thing," said Scott Schuberg, CEO at Rivkin Securities. "There is a lot of support at the 5,400 level so long as we stay elevated above that we can look for a resumption of the uptrend."

Helping to steady the market somewhat, gold miners rallied after bullion surged over 3 percent for its best day in eight months overnight. The Fed's lack of commitment to raise interest rates and continued tensions in the Middle East unleashed a wave of short covering in the yellow metal.

Australia's top gold miner Newcrest Mining Ltd jumped 4.5 percent to mid-April highs of A$10.87, while Regis Resources Ltd rose 4 percent.

Westfield Group and Westfield Retail Trust were in a trading halt as the world's biggest retail property group was cleared to split its business after shareholders voted in favour of the move.

Ten Network Holdings Ltd tumbled 8.5 percent to A$0.25, its lowest price since early April, extending its fall after the embattled network issued a profit warning the previous day.

New Zealand's benchmark NZX-50 index slipped 34.44 points to 5,157.72, as retailer Warehouse Group sank as much as around 8 percent, hitting a 1-1/2-year low of NZ$3.01, after it cut its full-year profit forecast.

Corporate software developer Diligent Board Member Services fell 3.7 percent to NZ$4.40, retreating from a NZ$4.70 hit in early trade, as first-quarter results showed a slowdown in revenue growth.

"There's some money getting pulled out of the market to make room for the new issues," said James Smalley, director of Hamilton Hindin Greene in Christchurch.

Travel software developer Serko priced its upcoming share offer at NZ$1.10 per share, before it lists on the stock exchange next week.

Editing by Shri Navaratnam

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