* Manufacturing activity down as trade tensions hurt output
* Reports of fresh probes dog financial sector
* NZ shares likely to snap 3 sessions of losses
By Nikhil Nainan
Sept 4 (Reuters) - Australian shares dropped on Tuesday on festering concerns over escalating global trade frictions, while financial stocks came under renewed pressure over reports of fresh investigations into the sector.
The S&P/ASX 200 index fell 0.3 percent, or 16.2 points to 6,294.7 by 0200 GMT. The benchmark edged lower on Monday.
Data showed manufacturing activity in China grew at the slowest pace in more than a year in August, compounding fears that the intensifying U.S.-led trade war could derail growth, not just in China, but globally.
With Wall Street closed for a labour day holiday, Damian Rooney, director of equity sales at Argonaut said “the concerns of the trade tariffs (will) continue to unnerve equity markets.”
U.S. President Donald Trump has said he is ready to implement new tariffs on Chinese imports as soon as a public comment period on the plan ends on Thursday, which would be a major escalation after Washington already applied tariffs on $50 billion of exports from China.
Financial stocks fell nearly 1 percent, on indications that the country's superannuation regulator is opening up fresh investigations into financial stocks, following revelations of widespread wrongdoings in a Royal Commission inquiry. (reut.rs/2NiCE6k)
The Royal Commission is expected to submit an initial report to the government by the end of September but the probe has already rattled financial investors and led to senior management shake-up and CEO resignations.
“The markets do not like uncertainty and volumes remain fairly thin,” Rooney said.
The country’s Big Four banks were in the red, with Australia and New Zealand Banking and Westpac Banking down as much as 1.4 percent each. Commonwealth Bank of Australia , which has faced strong criticism from the inquiry, was down 0.6 percent.
Markets aren’t expecting any surprises from the Reserve Bank of Australia, which is widely expected to hold its key interest rate at a record-low 1.50 percent for the 23rd straight policy meeting later in the day.
The Energy sector was the biggest drag on the index, with Whitehaven Coal leading the losses, sliding 8 percent, as the stock trades ex-dividend.
On the positive ledger, Evolution Mining climbed over 4 percent after it said it expects to produce over 700,000 ounces of gold for the next three years at least.
New Zealand’s benchmark S&P/NZX 50 index rose 0.2 percent to 9,279.50, and looks set to snap three straight sessions of losses.
Spark New Zealand and Air New Zealand supported the gains, up 1.5 percent and 1.2 percent, respectively, though losses form Fisher & Paykel Healthcare kept advances in check. For more individual stocks activity click on (Reporting by Nikhil Kurian Nainan, additional reporting by Karthika Suresh Namboothiri in Bengaluru Editing by Shri Navaratnam)