July 8 (Reuters) - Australian shares fell on Wednesday as stringent curbs imposed by Victoria state to contain a spike in COVID-19 cases dashed hopes of a swift economic recovery.
The country could take an economic hit of as much as A$1 billion ($700 million) each week because of the restrictions, Treasurer Josh Frydenberg said.
Goldman Sachs analysts said the six-week lockdown in Melbourne will weigh 1.5% on third-quarter GDP growth and added they now expected the country’s economy to contract 3.4% in 2020, compared to its prior estimate of a 2.75% contraction.
The S&P/ASX 200 index fell 0.5% to 5,983.1 by 0055 GMT, led by financials.
Financials declined 1.1% after the peak banking body said Australian banks would extend the loan repayment deferral period for borrowers struggling to service their debts due to the pandemic to 10 months from six.
Technology stocks fell 0.9%, led by Afterpay Ltd . The buy-now-pay-later declined as much as 4% following a discounted share placement.
The energy index fell 0.7%, as oil prices eased after industry data showing a build in U.S. crude stockpiles added to worries about oversupply.
Oil Search Ltd was down 3.2%, while Beach Energy Ltd lost 2.4%.
Among other stocks, Alumina Ltd slumped nearly 7%, making it the top percentage loser on the benchmark index.
However, a spike in coronavirus cases across the globe sparked a safe-haven rush, sending gold prices to a more than eight-year high.
The gold sub-index rose 3.6% to a record high. Northern Star Resources Ltd climbed as much as 6.5% after it said it would pay FY20 interim dividend of A$7.5 cents per share, which it had earlier postponed.
In New Zealand, the benchmark S&P/NZX 50 index reversed its course to trade 0.2% lower at 11,725.
Travel equipment retailer Kathmandu Holdings and flagship carrier Air New Zealand shed about 4% each. (Reporting by Shruti Sonal in Bengaluru; Editing by Subhranshu Sahu)