Australian shares post worst weekly drop since 2008 financial crisis; NZ falls

(Updates to close)

Feb 28 (Reuters) - Australian shares posted their worst weekly drop since the 2008 global financial crisis on Friday as fears of a rapidly spreading coronavirus tipping to a pandemic and spurring a global recession dampened sentiment.

The virus has spread at a rapid pace globally, with countries other than China accounting for about three quarters of new infections, prompting governments to stockpile medical supplies, order schools shut and cancel big gatherings to curb the spread of the flu-like virus.

Ratings agency Moody’s said the odds of a coronavirus pandemic are rising and added that a pandemic will trigger a global and U.S. recessions during the first half of this year.

The S&P/ASX 200 index tumbled 3.3%, or 216.70 points, to 6,441.20 at the close of trade to post its worst monthly decline since August 2015. The benchmark slipped 0.8% on Thursday.

The investors were also risk averse ahead of factory data from Australia’s largest trade partner - China, set to be released over the weekend, to gauge the tangible impact of an epidemic which has restricted business operations in the mainland.

Activity in China’s vast manufacturing sector likely shrank at the fastest pace in February since the global financial crisis, according to a Reuters poll.

The Australian benchmark has slid 10.5% since its last peak a week ago, putting the market in a technical correction.

Michael McCarthy,chief market strategist at CMC Markets, said the ASX 200 index’s next major support level at 6,400 points might keep it afloat in the short term but if breached, could trigger further falls.

Losses on the benchmark were driven by miners, with the gold and materials sub-indexes shedding 9.2% and 5.3%, respectively.

Tumbling iron ore prices hurt global miners BHP Group and Rio Tinto which fell 4.5% and 3.5%.

Meanwhile, a 1 percent fall in gold prices further battered gold stocks, which saw their worst day in over four and a half years.

Shares of Newcrest Mining dropped 8%, while those of St Barbara fell 6.8%.

Financial stocks also slumped over 3%, with the “Big Four” banks declining between 2.7% and 3.1%.

New Zealand’s benchmark S&P/NZX 50 index dropped 1.5%, or 176.01 points, to finish the session at 11,261.16.

Shares of Air New Zealand dropped 4.2%, while those of Ryman Healthcare fell 4.1%. (Reporting by Shreya Mariam Job, additional reporting by Rashmi Ashok in Bengaluru; Editing by Maju Samuel)