October 17, 2019 / 1:45 AM / 2 months ago

Australian shares retreat after 5-day rally as miners slump

* Mining heavyweights BHP, Rio lose more than 2%

* IOOF soars, to pay 13% less for ANZ pension assets

* Energy firms Woodside, Santos rise after Q3 results

By Devika Syamnath

Oct 17 (Reuters) - Australian shares inched down on Thursday, with heavyweight mining stocks extending sharp losses into a third session as iron ore prices continued to slide on worries over Chinese demand.

The S&P/ASX 200 index declined 0.4%, or 26.5 points, by 0107 GMT, set to snap five consecutive sessions of gains if the index stays in the negative by the close of trade.

Prices of iron ore slumped more than 3% to their lowest in six weeks on Wednesday, after China’s top steelmaking city of Tangshan issued a second-level smog alert that requires mills to further limit operations.

Mining behemoths BHP Group and Rio Tinto gave up 2.4% and 3%, respectively, weighing on the benchmark.

BHP said it would make a final investment decision on its long-delayed $17 billion Jansen potash project in Canada around February 2021. It also posted a slight dip in September quarter iron ore production due to planned maintenance at a key port.

Miner South32 Ltd added as much as 2.2% after it reported a 9% rise in coking coal production for the first quarter.

Financial stocks gave up earlier gains to fall slightly. If losses hold, the sub-index will snap five straight sessions of gains.

“While earnings may be dropping this year, the yields on these banks are still substantially above what investors may get investing in other banks,” said James McGlew, executive director of corporate stockbroking at Argonaut.

Australia wealth manager IOOF Holdings hit its highest in more than 10 months after saying it would now pay 13% less than earlier flagged for Australia and New Zealand Banking Group’s pension assets, to reflect changing market conditions.

“(The deal) was already earnings accretive (for IOOF) but this adds a bit more cream on the cake,” said McGlew.

ANZ shares dropped as much as 0.3%.

Bank of Queensland lost as much as 4.7% after posting lower full-year earnings and trimming dividend.

In the energy space, Australia’s two largest independent gas and oil producers Woodside Petroleum and Santos advanced as much as 1% and 1.7%, respectively, after posting third-quarter results.

Santos’ production and sales volumes peaked to record levels, benefitting from higher output from its Western Australia assets, while Woodside reported flat revenue for the quarter as weak LNG prices offset higher output from some gas projects.

The New Zealand benchmark declined marginally, by 2.93 points, to 11,175.71. Television operator Spark New Zealand Ltd was the top loser, having lost nearly 2%. (Reporting by Devika Syamnath in Bengaluru Editing by Jacqueline Wong)

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