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Australia shares fall 0.4 percent as miners weigh, eyes on Fed
March 20, 2013 / 6:12 AM / 5 years ago

Australia shares fall 0.4 percent as miners weigh, eyes on Fed

(Adds details, comments)
    SYDNEY, March 20 (Reuters) - Australian shares closed 0.4
percent lower on Wednesday, clawing back losses on hopes the
U.S. Federal Reserve will stick to its stimulus policy. 
    Both BHP Billiton and Rio Tinto fell to
nearly four-month low, after Goldman Sachs cut its price targets
on the stocks due to concerns about oversupply in iron ore
markets. 
    BHP, Rio and Fortescue Metals Group warned on
Tuesday of volatile markets and softer prices as growth in
China's steel production slows and more supply comes through.
 
    "I do believe that there are some slow down risks in China
again, as stimulus drops out and inflation becomes a problem,"
said Credit Suisse equity strategist Damien Boey, noting
negative sentiment was weighing on mining stocks.
    BHP dropped 2.7 percent and Rio slid 2.0 percent. Fortescue,
the world's fourth biggest iron ore miner, lost 2.3 percent. 
    The S&P/ASX 200 index lost 20.1 points to close at
4,967.3, according to the latest data, its lowest since February
12. The benchmark had lost 0.6 percent on Tuesday.  
    The market dropped as much as 0.9 percent in the session,
but pared some losses in the afternoon session with investors
buying on dips while digesting the impact of the Cyprus crisis.
    Cyprus's parliament overwhelmingly rejected a proposed levy
on savings accounts on Tuesday, throwing into disarray a
Eurogroup plan to rescue the island's stricken banks and sending
jitters through the global financial system. 
     "People took some assurance from the fact the ECB said they
will still provide liquidity," Boey said, referring to the
Eurogroup's commitment to the 10 billion euro rescue package.
 
    "What people are looking at is any problem in Europe means
that the Fed has to continue to print money," he added. "In that
respect people are viewing it as somewhat supportive."
    The Federal Reserve, which wraps up its two-day meeting on
Wednesday, looks set to sustain its $85 billion monthly
bond-buying stimulus as a new flare-up in the euro zone crisis
reminds officials of a risky global environment. 
    Banks recovered from deeper losses seen earlier, and ended
mixed. Westpac Banking Corp added 0.3 percent, while
the country's biggest lender Commonwealth Bank of Australia
 closed almost flat. 
    Consumer staples gained their ground as funds fled risky
assets. Supermarket chain Woolworths Ltd gained 0.4
percent, and Coles-owner Wesfarmers Ltd was flat. 
    Australia's biggest phone company Telstra Corp Ltd 
rose 0.9 percent.
    Australia's No.2 department store David Jones rose
4.1 percent to a nearly four-month high, after it posted a 13.5
percent fall in first-half earnings and said it was making good
progress with its turnaround strategy. 
    Gold miner Focus Minerals surged 15 percent as the
precious metal stayed strong on lingering uncertainty
surrounding Europe's financial stability. 
    Sino Gas & Energy Holdings Ltd soared 13.8 percent
after it said an independent assessment had identified
significant reserve of unconventional gas in its Chinese
project. 
    New Zealand's benchmark NZX 50 index ended up 0.1
percent at 4,349.4. 
    

 (Reporting By Maggie Lu Yueyang; Editing by Eric Meijer)

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