Australia Stocks Falter as Banks Drag

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--Broad selling pulled Australian shares to a nine-week low on Monday, more than wiping out all of last week's gains.

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The major banks were again a big drag on the market, adding to weakness in recent weeks after lackluster earnings and following a surprise tax that will be imposed from next month. A falling iron-ore price weighed heavily on miners, while Friday's rebound in oil prices did little for energy stocks.

Settling at the session low, the S&P/ASX 200 dropped 44.6 points, or 0.8%, to 5707.1--the lowest close since March 22.

The four biggest banks collected knocked almost 21 points from the index, and are now down an average 9.6% since budget day three weeks ago when the federal government introduced plans for a tax on the liabilities of the country's largest banks to help it close the deficit.

Australia & New Zealand Banking led the major banks lower, losing 1.9% to extend its fall this month to 15%. Commonwealth Bank of Australia and National Australia Bank each were 1.6% lower and Westpac Banking was down 1.3%.

Investment bank and asset manager Macquarie, which is also set to be squeezed by the new tax, was 1.2% weaker.

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Bendigo & Adelaide Bank and Bank of Queensland both fell 2.5%. The regional lenders won't be hit by the tax, but their credit ratings were last week downgraded one notch by Standard & Poor's to reflect increased risks faced by Australian financial institutions of a sharp correction in property prices.

Fortescue Metals Group dropped by 3.1%, Rio Tinto declined 1.5% and BHP Billiton eased 0.7%.

Among energy stocks, Woodside Petroleum slipped 0.9%, Oil Search lost 1.2% and Santos fell 1.4%.

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

(END) Dow Jones Newswires

May 29, 2017 03:08 ET (07:08 GMT)