December 30, 2019 / 2:29 AM / 21 days ago

Australia shares fall on worries over U.S. repo market; NZ drops

* Mining sector leads declines

* Gold stocks rise on firmer bullion prices

* NZ’s Metlifecare jumps on deal with EQT

By Nikhil Subba

Dec 30 (Reuters) - Australian shares fell on Monday, tracking a feeble finish on Wall Street last week, as investors were worried about the year-end pressure on repo market in the United States.

The S&P/ASX 200 index dropped 0.6% to 6,783.70 by 0139 GMT. The benchmark had gained 0.4% on Friday.

“There is a general concern to see how well everything squares off at the year’s end in the United States and that particularly points to the repo market,” said Brad Smoling, managing director at Smoling Stockbroking Pty Ltd.

The U.S. Federal Reserve, earlier in the month, injected additional liquidity of $500 billion, as demand for funds to settle Treasury purchases and pay corporate taxes outweighed loans available.

The shortage had put pressure on U.S. repo rates in September when interest rates in U.S. money markets shot up to as high as 10% for some overnight loans, more than four times the Fed’s rate.

“If there is not enough liquidity available from the Fed for the end of the year for corporations and banks to balance books, that could cause a problem,” Smoling added.

On Friday, the Nasdaq ended 0.2% lower, snapping a 11-day winning streak, while the S&P 500 closed flat.

In Australian markets, the mining sector was the top loser, slipping almost 1% to record its worst session since Dec. 23.

Index heavyweight BHP Group shed about 1%, while peer Rio Tinto fell as much as 1.4% to its lowest in two weeks.

The financial sub-index fell as much as 0.9% to its lowest since Dec. 13 and worst session in almost three weeks. All of its components, including the “big four” banks, dropped.

Despite oil prices hitting three-month highs on Friday, the energy space weakened as much as 0.8% to an over two-week low.

Woodside Petroleum and Santos tumbled 1.1% each, to their lowest since Dec. 13 and Dec. 16, respectively.

Only gold stocks rose, up about 0.5%, as bullion prices gained.

New Zealand’s benchmark S&P/NZX 50 index slipped 0.1% to 11,589.36.

Energy retailer Meridian Energy fell as much as 2.4% to a week’s low, while Mercury NZ lost 2.3%. Both were top losers on the benchmark.

Retirement village operator Metlifecare Ltd rose as much as 7.1% to its highest since Nov. 2007 after it entered a deal with Asia Pacific Village Group (APVG), an entity of Swedish buyout firm EQT AB. (Reporting by Nikhil Subba in Bengaluru; editing by Uttaresh.V)

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