August 12, 2019 / 7:07 AM / 3 months ago

Australian stocks post meagre gains as mining losses cap earnings lift

(Updates to close)

By Nikhil Nainan

Aug 12 (Reuters) - Australian shares eked out modest gains in thin trade on Monday, as losses in the mining sector and U.S.-China trade fears offset the boost from upbeat corporate earnings.

The S&P/ASX 200 index ended 0.1% higher at 6,590.3. It had gained 0.3% on Friday.

With domestic corporate earnings in full swing, investors are looking for signs on how companies are faring in a slowing economy recently bolstered by two official interest rate cuts.

Electronics retailer JB Hi-Fi Ltd defied the retail gloom that has caught many of its peers, beating its own annual profit guidance. The strong result sent shares up 13% to a record high of A$31.6, as investors saw recent tax and interest rate cuts supporting sales.

JB Hi-Fi was the biggest gainer on the benchmark and closed 10% higher.

Real estate classifieds firm REA Group Ltd was among the top gainers, extending gains on Monday after investors shrugged off a large drop in profit on Friday to close higher.

Local broker Morgans said the result was much better than many investors feared and raised its price target for the company. Shares closed 6.3% higher.

Rubber glove maker Ansell flagged a stronger outlook despite posting lower annual profit, pushing its shares 6% higher.

Bendigo and Adelaide Bank, a mid-sized lender, rose 3.4% as traders bought in on cost cutting plans even as remediation costs ate into cash earnings.

Despite encouraging earnings domestically, global growth concerns largely stemming from the bitter U.S.-China trade war, weighed on sentiment, hitting Australian mining stocks.

Top iron ore miners Rio Tinto and Fortescue Metals Group slid 2.8% and 4%, respectively.

Dalian iron ore slumped to a two-month low on worries over weak demand and emission controls in a top steel-producing province in China.

With large parts of Asia closed for public holidays, trade volumes were thin at about 490 million shares, compared with a 30-day average of a little over 600 million.

The investor caution came after U.S. President Donald Trump doused hopes of a trade deal anytime soon, while the effects of the damaging trade war were underscored by a warning from Goldman Sachs over the risk of a U.S. recession.

New Zealand’s benchmark S&P/NZX 50 index was unchanged at 10,872.74 from Friday.

Fonterra, dropped 5.1% over the session after saying it would not pay a dividend this year and that it was on track to post an annual loss due to a series of write-downs. (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Sam Holmes)

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