March 5, 2018 / 1:12 AM / 19 days ago

U.S. tariffs, Italian election weigh on Australian shares; NZ stocks higher

* Material stocks hit three-week low

* Healthcare, industrial stocks help NZ stocks edge higher

By Christina Martin

March 5 (Reuters) - Australian shares edged lower on Monday, as proposed U.S. tariffs on steel and aluminium weighed on materials stocks and the prospect of a hung parliament in Italy hit global investor appetite.

U.S. stock futures slipped amid fears of a global trade war, which hit Asian stocks, while the euro was volatile after exit polls for Italy’s elections pointed to a hung parliament.

The S&P/ASX 200 index slipped 0.4 percent, or 23 points, to 5,905.9 by 0104 GMT. The benchmark closed down 0.7 percent on Friday.

“It’s a mixture of two factors - trade war fears and a possible hung parliament in Italy both add to the selling pressure in U.S. futures,” said Peter Spanos, volatility risk manager at CMC Markets.

A centre-right coalition is set to win the most seats in Italy’s parliament ahead of the anti-establishment 5-Star Movement, according to the exit polls, although it was unlikely to produce an outright winner.

Material stocks slid as much as 1 percent to a three-week low, with index heavyweights BHP Billiton Ltd and Rio Tinto Ltd falling 1.5 percent and 1.1 percent, respectively.

“I think Trump’s proposed tariffs are still weighing on the (materials) sector and will do so for some time,” said Spanos.

“It’s clearly negative and recent talk from Trump indicating that there will be no negotiations to all ally countries, is clearly impacting the materials sector.”

President Trump announced on Thursday he would impose hefty tariffs on imported steel and aluminium to protect U.S. producers, risking retaliation from major trade partners like China, Europe and neighbouring Canada.

The financial sector in Australia fell as much as 0.7 percent to its lowest in more than a week, with the “Big Four” banks losing between 0.4 percent and 0.9 percent.

Commonwealth Bank of Australia lost as much as 1.1 percent to over a one-week low.

The top loser on Australia’s main index was Retail Food Group Ltd, slumping as much as 49.5 percent to its lowest since December 2008 after the company posted a 31.8 percent plunge in first-half profit on Friday.

Meanwhile, New Zealand’s benchmark S&P/NZX 50 index climbed 0.4 percent, or 28.98 points to 8,317.4, led by healthcare and industrial stocks.

The top gainer on the index was Fisher & Paykel Healthcare Corporation Ltd, rising as much as 2.7 percent.

Reporting by Christina Martin in Bengaluru; Editing by Sam Holmes

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