December 4, 2012 / 1:01 AM / in 5 years

Australia shares slip ahead of expected rate cut, U.S. data weighs

(Adds details, comments, stocks on the move)
    CANBERRA, Dec 4 (Reuters) - Australian shares retreated 0.3
percent in late morning trade on Tuesday, with investor
sentiment dampened by concerns about U.S. growth and Washington
budget talks, as the market remains cautious ahead of an
expected rate cut from the central bank.     
    Investors are betting the Reserve Bank of Australia will cut
interest rates by a quarter point on Tuesday to match a record
low of 3 percent as it seeks to insulate the resource-rich
economy against a slowdown in the mining sector. 
    "You've got on the one hand the prospect of a big stimulus
coming today, on the other hand you've got this 'fiscal cliff'
in America which nobody really knows how it will be resolved,"
said Damien Boey, an equity strategist at Credit Suisse.
    However it was unclear how the market would react to a rate
cut, Boey said. 
    "Would it respond favourably in the sense of 'oh, good we
have the stimulus we were looking for', or would it respond
badly in the sense of 'no, the RBA is actually meaning there is
a problem yet'," he said, "There's two ways to look at that."
    The benchmark S&P/ASX 200 index shed 11.9 points to
to 4,519.6 at 0038 GMT. It rose 0.6 percent on Monday to a
five-week high.
    Top miner BHP Billiton slipped 0.5 percent to
A$34.37, while rival Rio Tinto Ltd edged up 0.2 percent
to A$58.67. 
    In anticipation of a rate cut, department store Myer
Holdings jumped 2.8 percent and smaller rival David
Jones rose 0.8 percent. 
    Banks were slightly weaker, with Commonwealth Bank of
Australia dipping 0.2 percent and Wespac Banking Corp
 losing 0.4 percent. National Australia Bank 
bucked the trend by adding 0.4 percent.   
    New Zealand's benchmark NZX 50 index fell 0.3
percent to 4,035.5.
    * Shares in GrainCorp Ltd jumped 3.3 percent, after
U.S. agribusiness giant Archer Daniels Midland Co raised
its takeover bid for the grains handling company.
    * Stockland Corp Ltd, Australia's second-largest
property group, fell 1.0 percent after it said underlying
earnings per share for full year 2013 would be at the lower end
of its prior outlook. 

 (Reporting by Maggie Lu Yueyang; Editing by Richard Pullin)
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