Australia Stocks Recover to Finish Stronger

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--Australian shares recovered from early weakness to finish Wednesday higher, reversing from the previous day's drop.

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The major banks trimmed losses earlier in the session as investors digested the federal budget and plans for a levy on the biggest lenders' liabilities, while regional banks rallied and infrastructure-related companies advanced in the wake of Canberra's spending plans.

Amid broad gains, the S&P/ASX 200 rose 35.5 points, or 0.6%, to 5875.4.

For the day, 2.64 billion shares valued at 8.39 billion Australian dollars (US$6.16 billion) were traded, Commonwealth Securities said.

The budget, released after the market closed Tuesday, included plans for A$75 billion in infrastructure spending over the next decade on a new airport in Sydney and a high-speed rail corridor, among other projects. It also confirmed a levy on the liabilities of the five largest banks, aimed at raising A$6.2 billion over four years.

Ahead of the confirmation, speculation about the levy weighed heavily on banking stocks as analysts estimated it would cut as much as 6% from annual earnings. Bank executives on Wednesday criticized what they said was a revenue grab, and warned that the tax would ultimately hit shareholders and borrowers.

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Commonwealth Bank of Australia pared losses to finish 0.4% lower, and Westpac Banking and National Australia Bank each lost 0.7%. Australia & New Zealand Banking rose 0.8%, while Macquarie lost 0.6%.

Regional lenders Suncorp, Bendigo & Adelaide Bank and Bank of Queensland rose between 2.8% and 3.9%, rebounding from Tuesday's losses.

Among the miners, BHP Billiton and Rio Tinto gained 1.5% and 2.1%, respectively. However, South32 fell 2.6% after warning it would miss a target for annual coal production.

Woodside Petroleum rose 0.7%, Oil Search added 0.1% and Santos was steady.

News Corp., which owns the publisher of The Wall Street Journal and Dow Jones Newswires, climbed 3.2% after it narrowed its losses in the March quarter and recorded better-than-expected revenue for the period.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

May 10, 2017 03:51 ET (07:51 GMT)