SYDNEY, Mar 1: Australian shares fell 0.5 percent in late morning trade on Friday, dragged by a sell-off in cyclical stocks, as a key manufacturing report in China indicated sluggish growth in the world’s second largest economy.
China, Australia’s biggest resources buyer, said on Friday its official purchasing managers’ index (PMI) was 50.1 for February, missing market expectations for a reading of 50.2 as overseas demand for Chinese goods remained tepid.
The weaker number just added to the market’s woes, after investors had shrugged off fears about political turmoil in Italy earlier, said Chris Weston, an institutional dealer at IG Markets based in Melbourne.
Top miner BHP Billiton Ltd fell 1.5 percent, while Rio Tinto Ltd tumbled 2.3 percent.
The benchmark S&P/ASX 200 index lost 25.2 points to 5,078.9 as at 0118 GMT. The benchmark jumped 1.3 percent on Thursday to its highest close since September 2008.
The market has rise over 9 percent this year, driven by receding U.S. And euro zone debt concerns and a relatively strong earnings season.
Investors were also wary about the U.S. Budget cuts, which are set to begin within hours, after the U.S. Senate on Thursday defeated a Republican plan for replacing $85 billion in across-the-board federal spending cuts.
‘There is always supposed to be a threat more than anything else, it seems to be coming into reality now,’ said Weston, noting the spending cut would be a headwind for U.S. Employment and growth.
Most big banks managed to hold the ground, led by a 1.3 percent gain in National Australia Bank Ltd. Australia and New Zealand Banking Group dipped 0.1 percent.
Defensive stocks were weaker, with the country’s flagship telecom company Telstra Corp Ltd down 0.9 percent.
New Zealand’s benchmark NZX 50 index fell 0.2 percent to 4,312.8.
STOCKS ON THE MOVE
* Television group Ten Network Holdings Ltd jumped 4.6 percent to A$0.35, after media reported rival Seven Group Holdings Ltd ‘s boss Kerry Stokes had built up a A$40 million stake in it.
* Aurora Oil & Gas Ltd plunged 3.4 percent to A$3.75, after it said it had made Eagle Ford shale acquisition for A$117.5 million.
(AGENCIES)
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