April 7, 2017 / 3:31 AM / 4 months ago

Australia, NZ shares tumble after U.S. missile strikes on Syria

April 7 (Reuters) - Australian shares skidded on Friday, erasing early gains, after the United States launched cruise missile strikes on a Syrian airbase, sparking geopolitical anxieties.

President Donald Trump ordered the strike in which more than 50 Tomahawk missiles were launched from U.S. Navy warships in the Mediterranean Sea against a Syrian airbase in response to a deadly chemical attack in a rebel-held area.

The S&P/ASX 200 index fell 0.3 percent, or 16.29 points at 5,840 by 0300 GMT.

"There's absolutely a reason why this [the market] has fallen, there's been a risk-off in place ever since we saw confirmation that Donald trump gave permission to release 50 or so Tomahawk missiles," said Chris Weston, an institutional dealer at IG Markets.

Facing his biggest foreign policy challenge since taking office in January, Trump took the toughest direct U.S. action yet in Syria's six-year-old civil war, raising the risk of confrontation with Russia and Iran, the Syria government's main military backers.

"I think this has become something a bit more concerning between the U.S. and Russia. We'll have to the see what the Russians side of this is and ultimately we have to see what the response is now from (Syrian President) Assad," Weston said.

"If we do see a response from Assad, then markets will probably come off a little bit more."

Market participants also awaited the outcome of talks between U.S. President Trump and China's President Xi Jinping, as well as the monthly jobs report that could support more U.S. interest rate hikes.

Trump seeks trade concessions from China, but he is also looking to China to use its influence over North Korea to help undermine North Korea's weapons programme. nL2N1HD294]

All stocks except energy and gold counters slumped as news of the U.S. strikes spread - spooking investors globally.

Financial stocks were the biggest drag on the market, with Commonwealth Bank of Australia losing 0.7 percent.

Energy shares rose 1.7 percent, as oil prices surged after the strike. Origin Energy gained 2.4 percent.

The gold stocks sub-index soared 2.8 percent, with Newcrest Mining rising 2.7 percent.

New Zealand's benchmark S&P/NZX 50 index declined 0.6 percent, or 41.90 points at 7,247.62.

Industrial and material stocks led the losses on the index, with Fletcher Building Ltd falling 1.5 percent, while Meridian Energy lost 2.2 percent.

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Reporting by Krishna V Kurup; Additional reporting by Urvashi Goenka and Christina Martin; Editing by Eric Meijer

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