May 12, 2020 / 1:42 AM / 16 days ago

Australia shares drop 1% as risk of second COVID-19 wave weighs

* Miners lead losses

* Energy sector sees worst day in more than 1 week

* NZ benchmark at highest level since April 20

By Nikhil Subba

May 12 (Reuters) - Australian shares retreated on Tuesday, with the mining index leading the losses, as a second wave of coronavirus infections in several parts of the world kept investors on edge.

The S&P/ASX 200 index was down 1.1% at 5,400.30 points, as of 0055 GMT. The benchmark finished 1.3% higher in the previous session.

The central Chinese city of Wuhan, where the pandemic originated late last year, reported five new confirmed cases on Monday, casting doubts over efforts to lower coronavirus-related restrictions across the country as businesses restart and individuals went back to work.

Similarly, new coronavirus infections are accelerating again in Germany just days after its leaders loosened social restrictions, while South Korea has warned of a second wave of coronavirus infections.

A second wave of infections would likely snuff out the rally in equity markets as investors position for a severe and prolonged global recession.

Dented by a drop in iron ore prices, the Australian mining index fell up to 2.2%, with industry heavyweight BHP Group slipping as much as 2.5% and Rio Tinto sliding 2.1%.

Energy stocks fell up to 1.6​%, their worst day since May 4, as the space was spooked by the likelihood of demand being curtailed by a second wave of coronavirus infections.

Oil Search Ltd fell as much as 3.4%, while New Hope Corp Ltd, lost 2.06%.

Financial stocks fell up to 1.4%, with all the ‘Big Four’ banks trading in the negative territory.

Meanwhile, losses on the Australian benchmark were capped by a 1.6% rise in the Healthcare index.

CSL gained as much as 1.8%, while Ramsay Health Care climbed over 1%.

New Zealand’s benchmark S&P/NZX 50 index added as much as 0.5% to hit its highest level since April 20 at 10,817.42.

Among top percentage gainers on the New Zealand benchmark were SKY Network Television Ltd, up as much as 24.7%, followed by Vista Group International Ltd, gaining nearly 18%%.

Reporting by Nikhil Subba in Bengaluru, Editing by Sherry Jacob-Phillips

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