May 16, 2018 / 3:12 AM / in a year

Australia shares extend gains; a2 Milk takes NZ shares lower

* A2 Milks shares plunge 20 percent

* Myer rises 8 percent despite fall in Q3 sales

By Susan Mathew

May 16 (Reuters) - Australian shares crept higher on Wednesday, supported by resource stocks on firmer commodities prices, but New Zealand shares fell sharply, weighed by the dairy sector after a2 Milk flagged weaker-than-expected revenue guidance.

Shares of a2 Milk , which are listed in both Australia and New Zealand, fell as much as 20 percent on both exchanges after the company’s revenue forecast fell short of the average forecast of analysts.

The New Zealand benchmark S&P/NZX 50 index fell 1.3 percent, or 115.17 points, to 8,593.61 by 0235 GMT.

“Investor expectations for that company (a2 Milk) are very high. We’ve had number of upgrades over the last few years, so this has created a bit of a selling in the stock today,” said Grant Williamson, director of Christchurch-based broker Hamilton Hindin Greene.

In Australia, the S&P/ASX 200 index was up 0.4 percent, or 25.8 points to 6,123.9 with gains in material and financial stocks far outweighing a2 Milk’s losses.

Material stocks gained, mirroring overnight strength in their underlying commodity prices with BHP up 1.6 percent and Rio Tinto gaining 1.3 percent.

The ‘Big 4’ banks were up between 0.1 and 0.5 percent.

Shares of troubled department store Myer Holdings rose 8 percent despite posting a 2.7 percent drop in third-quarter due to an unseasonably warm start to winter.

Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities, said expectations for Myer had already been very low.

“When you are probably getting somewhere near the bottom, you start looking at the assets and value of the business,” Somasundaram said. “So, I think any kind of bad news its got has to be seriously bad to go lower here.”

He added the recent colder weather in Australia meant Myer should be doing better over the next couple of months.

For more individual stocks activity click on ($1 = 1.4586 New Zealand dollars) (Reporting by Susan Mathew in Bengaluru; Additional reporting ny Shanima A; Editing by Sam Holmes)

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