October 9, 2019 / 6:11 AM / 2 months ago

Australia shares snap 3-day winning streak as trade frictions intensify

(Updates to close)

Oct 9 (Reuters) - Australian shares on Wednesday ended lower for the first time in four sessions as another spike in trade tensions between the United States and China clouded optimism over senior-level talks set to begin this week.

The S&P/ASX 200 index ended 0.7% weaker at 6,546.70, after gaining about 1.5% over the previous three sessions.

Asian stocks fell the most in a week, while Wall Street indexes and European stocks dropped after Washington imposed visa restrictions on Chinese officials and widened its trade blacklist.

Washington is also moving ahead with discussions around possible restrictions on capital flows into China, with a focus on investments made by U.S. government pension funds, Bloomberg reported.

The moves saw investors fearing retaliatory measures from Beijing, given that a volley of tariffs between the world’s two largest economies has battered financial markets for more than a year.

“The timing couldn’t be worse ... there was some optimism that we might at least see a limited deal out of the meeting coming on Thursday night, (but) the potential for that appears to have slipped away,” said Michael McCarthy, chief market strategist at CMC Markets.

All the major sectors in the ASX 200 finished lower, with the heavyweight financial and mining subindexes losing about 0.8% each.

The Big Four banks dropped, with Australia and New Zealand Banking Group leading the losses, ending 1.2% lower.

Shares of mining majors BHP Group and Rio Tinto ended 1.4% and 0.9% lower, respectively.

Underpinning the fall in the miners was the easing of China’s steel futures as a sluggish real estate market weighed on demand outlook.

“It’s not just pressure on shares, we’ve seen drops in key industrial commodities, particularly crude oil and copper, and that’s having a double impact on Australian trading today,” McCarthy added.

Energy stocks lost about 1.6%, with Washington H Soul Pattinson & Co Ltd and Viva Energy Group declining about 3% each.

Gold stocks, however, rose 1.7% as safe-haven demand pushed up bullion prices. The gold stocks sector has gained nearly 40% this year, and is the best performer in the ASX 200.

Drugmaker Clinuvel Pharmaceuticals Ltd finished the session on a record high after the U.S. Food and Drug Administration approved the company’s treatment for a rare skin disorder. The stock racked up the highest intra-day gain in the benchmark index.

Elsewhere, New Zealand stocks too fell amid broad-based declines, with the benchmark S&P/NZX 50 index closing about 0.7% lower at 10,940.86.

Energy-related firms New Zealand Refining Co Ltd and Meridian Energy Ltd were the top percentage decliners, losing about 3% and 2.5%, respectively.

Reporting by Aby Jose Koilparambil and Ambar Warrick in Bengaluru, Editing by Sherry Jacob-Phillips

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