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Australia shares fall as metals prices plunge, hitting resource stocks
March 12, 2014 / 1:21 AM / 4 years ago

Australia shares fall as metals prices plunge, hitting resource stocks

(Adds analysis, quotes, stocks on the move)

SYDNEY, March 12 (Reuters) - Australian shares dropped 1 percent on Wednesday as a slide in metals prices sent resource stocks tumbling, with the mood darkened further by data showing another decline in Australia’s consumer sentiment.

Copper miners were hit hard as the metal tumbled to its lowest level in three years on worries about Chinese demand and liquidation of inventories used for finance deals.

Copper producer OZ Minerals Ltd lost 1.3 percent and Bougainville Copper Ltd tumbled 5.8 percent. Rio Tinto Ltd was down 0.3 percent, hitting its lowest since October, and BHP Billiton Ltd shed 0.7 percent to a five-week low.

The S&P/ASX 200 index was down 56.4 points at 5,357.4 as of 0054 GMT, after closing nearly flat on Tuesday.

The benchmark touched a 5-1/2-year high of 5,462.3 points on March 7, underpinned by healthy corporate earnings, but has since slipped to three-week lows as weak Chinese data spurred concerns about the health of Australia’s largest export market.

“Chinese concerns are continuing to linger, because there’s rumours going around that there’s another corporate default,” said Matthew Sherwood, head of investment market research at Perpetual.

“So in the end this is going to continue to be a drag on Australia’s trade exposed sectors,” Sherwood said, adding that soft consumer confidence numbers have also weighed on the consumer sector.

Australian consumer sentiment fell for a fourth straight month in March as households worried about the economic outlook and their job security, with pessimists now outnumbering optimists, a survey showed.

Consumer cyclical stocks including department store operators Myer Holdings Ltd and David Jones Ltd fell 2.5 percent and 2.7 percent, respectively.

The Big Four banks all fell, with Westpac Banking Corp down 1.5 percent and Australia and New Zealand Banking Group shedding 1.2 percent. Among midtier financials, Bank of Queensland Ltd stumbled 1.5 percent.

Lynas Corp plunged for a second day, dropping 7.4 percent to a near five-year low of A$0.25, after the rare earths miner warned it will likely need to raise new funds or seek a reprieve from its lenders in the next 12 months or could face the risk of bankruptcy.

New Zealand’s benchmark NZX 50 index slipped 0.1 percent to 5,094.9. (Reporting by Thuy Ong; Editing by Chris Gallagher)

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