October 15, 2018 / 1:33 AM / 10 months ago

Australia shares extend slide after worst week in over 2-1/2 yrs; NZ up

* Banks, mining stocks lead losses

* CBA sinks to 5-year low

* NZ climbs, Steel & Tube reverses after Fletcher pulls offer

By Devika Syamnath

Oct 15 (Reuters) - Australian shares retreated on Monday on lingering cautiousness after the benchmark took a battering last week when concerns over rising U.S. Treasury yields and U.S.-China trade tensions had sparked a global equity rout.

The S&P/ASX 200 index lost as much as 1.6 percent to its weakest level since April, trading at 5,797.3 by 0102 GMT. It tumbled 4.7 percent last week - the biggest weekly loss in over 2-1/2-years - in the wake of the markets ructions.

Bank stocks led the losses, slipping as much as 2.3 percent to their worst level in nearly two years, as the sector struggled to stay afloat in the wake of damaging revelations of misconduct in a months-long quasi-judicial Royal Commission inquiry.

“Headwinds for them (banks) out of the Royal Commision are bit of a double whammy,” said Dale Raynes, associate Director at CPS Capital, referring to financial penalties imposed on the banks, a loan book under pressure and the fear of a cut to dividends.

Though the banks are historically known for paying juicy dividends, some of them have of late flagged hits to earnings as they pay a hefty price for poor banking practices.

“They haven’t announced that yet but if their earnings are down, they will have to cut dividends. So that’s why we are seeing further selling,” added Raynes.

Commonwealth Bank of Australia named Alan Docherty as its chief financial officer, following the unexpected departure of Rob Jesudason from the post earlier this year as the lender battles one of the worst governance crises in its history.

Shares of CBA, the country’s biggest lender, dipped as much as 2.7 percent to an over five-year trough, while the rest among the “big four” banks fell between 1.3 percent to 1.6 percent.

Mining stocks also weakened in tandem with regional peers, down as much as 2.3 percent.

Heavyweights Rio Tinto and BHP slipped 2.1 percent and 2.4 percent, respectively.

On the M&A front, Investa Office Fund said it has given private equity firm Blackstone four days to match a rival offer by Canada’s Oxford Properties Group as the bidding war for the Australian office owner comes to a head.

Investa’s shares edged up 0.4 percent.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index was 0.3 percent higher or 25.43 points to 8,868.67.

Shares of steel distributor Steel & Tube Holdings swung from a four-month high to their steepest fall in two months when Fletcher Building pulled their offer for the company after a sweetened deal was rebuffed earlier in the day. The stock was down was much as 6.7 percent, while Fletcher was off 1.5 percent to over a one-month low.

Reporting by Devika Syamnath in Bengaluru Editing by Shri Navaratnam

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