Australia shares tumble on Greece, China fears

By: | Published: July 8, 2015 8:58 AM

Australian shares fell on Wednesday amid concerns about an equity rout in China and fresh doubts that Greece can reach a bailout deal with Europe.

Australian shares fell on Wednesday amid concerns about an equity rout in China and fresh doubts that Greece can reach a bailout deal with Europe.

A weaker dollar and slump in the iron ore price <.IO62-CNI=SI> also contributed to the downward pressure.

In China, a harsh correction has sliced 30 percent off shares since mid-June, threatening a new blow to the country’s already slowing economy despite a slew of market support steps from Beijing.

Meanwhile, Europe has given Athens until the end of the week to propose new reform measures in exchange for a debt bailout, but investors have grown wary of the possibility of a resolution that involves Greece staying in the currency bloc.

The S&P/ASX 200 index was down 87.1 points or 1.6 percent to 5494.3 by 0245 GMT. The benchmark has moved more than one percent in either direction in each session this month, reflecting an increasingly skittish mood.

“Volatility has increased in the past month or so,” said Bill Keenan, general manager equities and researcher at Lonsec Ltd.

“The Aussie dollar has come down and when the dollar has fallen, foreign investors are losing money and it does lead to some selling. The Greece and Chinese news hasn’t helped,” added Keenan.

Bank stocks were the biggest drag on the benchmark, with Australia and New Zealand Banking Group off by nearly 2 percent while Commonwealth Bank of Australia and Westpac Banking Corp were down 1.3 percent and National Australia Bank fell 1.5 percent.

Big miners also lost ground after the iron ore price fell back below $50 overnight, near multi-year lows, amid expectations of softening demand from China.

BHP Billiton and rival Rio Tinto both lost about 2.5 percent and iron ore giant Fortescue Metals Group  dipped 4 percent.

Energy stocks also fell with the price of oil, with Woodside Petroleum 1.5 percent lower and Santos easing 2.8 percent. No. 1 energy retailer Origin lost 1.5 percent.

New Zealand’s benchmark NZX50 share index was little changed at 5,800.19, supported by ongoing gains in healthcare stocks, but the advances were limited due to weakness in utilities and consumer-related sectors.

Retirement village operator Summerset Group Holdings  jumped 2.2 percent to a lifetime high, extending its gains after forecasting a hefty lift in annual profit a day earlier.

Meanwhile, energy retailers Meridian Energy and Genesis Energy each fell 1.1 percent.

The sector faces uncertainty ahead of an August deadline for Rio Tinto to decide whether to extend a power supply contract with Meridian for its aluminium smelter.

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