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Australia stocks drop to 3-wk low on economy woes
Tuesday June 23, 01:59 PM
(Adds analyst comment, stocks)
SYDNEY, June 23 (Reuters) - Australian shares slid 2.8 percent to a three-week low on Tuesday after investors turned doubtful about the strength of a world economic recovery, selling mining stocks such as BHP Billiton Ltd (ASX: BHP.ax) .
Bank stocks got hammered too, with investor worries about rising bad loans and banks' ability to raise money resurfacing after ratings agency Moody's said the outlook for Australian and New Zealand banks was negative, although the system was robust.
"Whether demand in oil and commodity markets can move higher from here is a big question mark," said Tony Russell, a senior equities adviser at ABN AMRO Morgans. "We have seen some better news on the economy but we need to see more."
The S&P/ASX 200 index .AXJO dropped 109 points to 3,808.9 by 0150 GMT. New Zealand's benchmark NZX 50 index .NZ50 fell 1.1 percent or 32.1 points to 2,762.8.
Stock markets dropped across Asia on Tuesday after U.S. stocks suffered their worst one-day loss in two months overnight, with energy and metal prices also weaker. [O/R] [MET/L]
Some investors have turned sceptical in the past week that the recent improvement in economic data signalled a recovery, arguing instead that it only indicates an abating crisis.
The concerns were underscored on Tuesday by comments from a China central bank official who said China's economy, the world's third-largest, was moving in the right direction but not yet on a solid footing. [ID:nBJC000341]
Global miner BHP Billiton fell 3.8 percent to A$33.91, and Rio Tinto (ASX: RIO.ax) , the world's third-biggest mining group, dropped 4.1 percent to A$47.95.
STOCKS ON THE MOVE
* Moody's said Australia's financial system was still one of the world's most robust, but said the key risk to Australian banks arose from possible deterioration in corporate businesses, as company bank loans were concentrated on a few firms.
Commonwealth Bank (ASX: CBA.ax) , Australia's third-largest, was down 2.8 percent at A$37.63.
Top bank National Australia Bank (ASX: NAB.ax) slid 2.4 percent to A$21.95, Westpac (ASX: WBC.ax) , Australia's No. 2 bank by assets, dropped 3.8 percent to A$19.36, and Australia and New Zealand Banking Group (ASX: ANZ.ax) , the No. 4 bank, fell 3.1 percent to A$16.06.
Australia's biggest investment bank, Macquarie Group MQG.AX, lost 4.15 percent to A$36.25.
0130 GMT
* Coal stocks were among the top losers as investors took profits after their rallies since the start of March, analysts said. Riversdale Mining (ASX: RIV.ax) slumped 9.7 percent to A$5.13, and Centennial Coal (ASX: CEY.ax) fell 7.4 percent to A$2.39.
0150 GMT (Reporting by Koh Gui Qing)
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