Feb 24(Reuters) - A selloff in materials stocks knocked Australia's shares on Friday morning, with losses led by mining giants BHP Billiton and Rio Tinto.
The S&P/ASX 200 index dipped 0.49 percent, or 28.36 points to 5,756.3 by 1228 GMT. The benchmark fell 0.4 percent on Thursday.
"Materials are a major drag on the index today, there was quite a bit of softness in base metals last night along with a bit of selling in the major materials guys BHP and Rio," said Tony Farnham, economist at Paterson Securities.
A 2 percent slide in the price of iron ore, Australia's top export earner, on worries about surplus stocks at Chinese ports along with tumbling copper prices put miners to the sword.
The world's largest miner by market capitalisation BHP Billiton extended losses for a third day, dropping as much as 2.8 percent to its lowest in over a month.
Copper prices faltered on demand woes as China's housing minister suggested moves were afoot to stabilise the property market.
Mining giants Rio Tinto and Fortescue Metals group were also sold off, sinking 3.6 percent and 2.9 percent respectively.
Material stocks accounted for most of the losses in the bourse with the ASX 300 Metals and Mining index shedding as much as 1.9 percent to its lowest in a month.
Financial stocks were another casualty, weighed down by three of the "Big 4" banks that fell 0.1 to 0.2 percent. The only exception, Westpac Banking Corp, inched up 0.3 percent.
Murray Goulburn swung to a first-half net loss as a worldwide glut of milk formula sent the country's largest milk processor's shares tumbling down as much as 9.7 percent.
Bucking the trend, gold stocks glittered to touch a 3-1/2-month high as the U.S. Federal Reserve dampened near-term rate hike expectations, sending the country's biggest gold producer Newcrest Mining up as much as 2.4 percent.
As the earnings season has come to a close investors are looking out for the fourth quarter gross domestic product data due next week, which is expected to show modest growth.
Meanwhile, Reserve Bank of Australia(RBA) Governor Philip Lowe said that market pricing for steady rates this year seems "reasonable", in a clear signal that more cuts in interest rates are off the table.
New Zealand's benchmark S&P/NZX 50 index fell 0.7 percent, or 48.12 points, to 7,041.4, hitting its lowest in over three weeks.
Telekom stocks dominated gains with Spark New Zealand up 0.6 percent.
Air New Zealand, the biggest loser on the benchmark, fell 2 percent. (Additional reporting by Ambar Warrick; Editing by Shri Navaratnam)