Reuters - Financials

Australia shares fall to lowest since January as investors watch China sell-off

* Stock market down 0.42 percent

* Shares hit lowest level since January

* Losses limited by unemployment data – analyst (Adds analysis, quotes, stocks on the move)

By Charlotte Greenfield and Naomi Tajitsu

SYDNEY/WELLINGTON, July 9 (Reuters) – Australian shares slipped 0.4 percent on Thursday as a sharp sell-off in China’s equity markets continued to worry investors, but better-than-expected unemployment data helped to limit losses.

The S&P/ASX 200 index was down 22.928 points at 5,446.000 by 0313 GMT, after earlier dipping to 5,383.700, its lowest since January. The benchmark fell 2 percent on Wednesday.

“The only certainty out there is volatility and it’s another very volatile day on our market,” said James McGlew, executive director of corporate stockbroking at Argonaut.

“The situation with Greece and the euro feeds into it, but I think we are far more impacted by the goings on with our major trading partner and the implication that might have on growth,” he said, referring to China.

China’s securities regulator took the drastic step late on Wednesday of ordering shareholders with stakes of more than 5 percent from selling shares for the next six months, in a bid to halt a plunge in stock prices.

The Australian market gained back some of its losses after employment data released on Thursday defied expectations and rose for a second month in June.

The financial sector led losses, with Westpac down 1.4 percent and Macquarie down 0.9 percent.

The materials sector had gains, despite falling iron ore prices, as investors covered short positions, according to analysts. Fortescue Metals Group was up 6.2 percent and BHP Billiton rose 1.4 percent.

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New Zealand’s benchmark NZX50 share index fell 67.01 points or 1.16 percent to 5,700.69, as investors continued to dump riskier assets on concerns about the impact of plunging Chinese shares.

Losses were led by utilities and consumer-related shares, taking the index towards 5,684.05. A fall below that level would take shares to their weakest since late January.

Meridian Energy fell 2.3 percent while Mighty River Power slumped 2.1 percent. The sector faces uncertainty ahead of an August deadline for Rio Tinto to decide whether to extend a power supply contract with Meridian for its aluminium smelter.

Air New Zealand fell 1 percent after competitor Qantas and American Airlines received approval from Australia’s competition commission to deepen their relationship and service more trans-Pacific routes, a key expansion area for the New Zealand carrier.

Losses in Australian shares weighed on shares which are dual listed in New Zealand and Australia, with casino operator SkyCity Entertainment falling 2.5 percent while outdoorwear maker Kathmandu dropped 4.3 percent.

(Reporting By Charlotte Greenfield; Editing by Kim Coghill)

Reuters: Financials

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