January 25, 2019 / 1:19 AM / 6 months ago

Australian shares rise on materials, energy; NZ flat

* Aussie benchmark on track for a third consecutive week of gains

* AMP tumbles, flags near 97 pct drop in annual profit

By Shriya Ramakrishnan

Jan 25 (Reuters) - Australian shares rose on Friday, led by materials and energy stocks on higher commodities and oil prices, though investors were cautious ahead of high-level China-U.S. trade talks next week.

The S&P/ASX 200 index jumped 0.4 percent or 25.3 points to 5,891 by 0103 GMT and was on track for a third consecutive week of gains. The benchmark climbed 0.4 percent on Thursday.

An overnight rally in iron ore prices, boosted investor appetite for material stocks with the sub-index up 0.9 percent, making them the most dominant gainers on the benchmark.

The world’s biggest miner BHP Group climbed 0.8 percent, while its rival Rio Tinto added 0.9 percent.

Energy stocks also lent support to the benchmark, rising 1.2 percent to an over 2-month high, helped by strength in crude oil prices.

Benchmark heavyweight Woodside Petroleum firmed 1 percent, while oil and gas explorer Oil Search climbed 1.7 percent.

However, concerns over the months-long U.S.-China trade war, the longest U.S. government shutdown in history and slowing global growth kept risk sentiment in check.

Chinese Vice Premier Liu He will visit Washington next week for the latest round of trade talks between the two countries.

A further escalation in the U.S.-China trade war will likely trigger an even sharper global economic slowdown this year, economists said in a recent Reuters poll.

“At the moment it is a real conundrum for investors because there are so many conflicting signals about the prospects of 2019,” Michael McMcarthy, chief market strategist at CMC Markets said.

“I expect the trend this week of lower trading volumes in the Asia Pacific region to continue and market conditions overall very likely to remain light and sickly,” he added.

AMP Ltd, the country’s largest wealth manager, tumbled as much as 10.2 percent and was among the worst performers after it flagged a near 97 percent drop in its annual profit and slashed its final dividend, owing to large remediation costs and investment risk.

The financial sector was one of the worst hit sectors of 2018 after a high-profile inquiry exposed systematic wrongdoing and misconduct in some of the country’s largest banks.

AMP’s announcement added to a list of profit warnings by other Australian fund managers this month, shedding limelight on the vulnerability of the sector to share price fluctuations as a consequence of the damaging trade war between the Washington and Beijing.

Meanwhile, defensive healthcare stocks were in the red, largely dragged by medical device maker Resmed Inc which plunged 10.9 percent after the company missed second quarter revenue expectations.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index fell 4.57 points to 9,104.34.

Financials and utility stocks led gains, with NZ-shares of Westpac Banking Corp up 1 percent, while electricity retailer Meridian Energy gained 0.9 percent.

Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Kim Coghill

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