Australia Stocks End Lower Ahead of Yellen Testimony

By David Winning Features Dow Jones Newswires

Australian shares fell on Wednesday, reflecting investor caution as central bankers in North America prepare to provide new clues around the direction of monetary policy.

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The S&P/ASX 200 index closed down 1% or 55.1 points at 5673.8, with weakness among financial stocks including Commonwealth Bank of Australia more than offsetting gains in the resources sector. CBA dropped 1% to A$82.12, with Westpac Banking Corp. and National Australia Bank Ltd. also lower.

Investors were in wait-and-see mode ahead of a meeting of the Bank of Canada, which is widely expected to raise rates for the first time in seven years. Also, Federal Reserve Chairwoman Janet Yellen is scheduled to appear before Congress on Wednesday and Thursday. She has taken an optimistic view of the economy in recent weeks, bolstering the case for a third interest rate increase from the central bank this year.

Newcrest Mining Ltd. added 2% to A$20.25, as skittish investors sought safety in gold. Its gains came in spite of Deutsche Bank naming the miner among Australian gold stocks that are likely to disappoint in the upcoming results season.

Deutsche expects Newcrest's Cadia mine to fall well short of an original production target in fiscal 2017 after mining was disrupted by an earthquake, while costs there are set to rise materially. Elsewhere in the gold sector, Northern Star Resources Ltd. rose by 1.7% to A$4.69.

Shares in Vocus Group Ltd. lost some of Tuesday's froth after private equity firm Affinity Equity Partners matched an earlier indicative offer from KKR & Co. LP. Vocus fell 1.4% to A$3.49 and move below the price offered conditionally by each of the companies.

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Deutsche Bank said Vocus's willingness to allow each suitor to examine the company's books suggested "their proposals of A$3.50/share must be reasonably close to the board's internal valuation of the company." As a result, it thinks there is now a greater likelihood of an offer being recommended by the board.

Industrial container supplier Royal Wolf Holdings Ltd. surged 38% to A$1.79 after it agreed to a takeover offer from its controlling shareholder that values it at around A$184 million. Royal Wolf said General Finance Corp. is offering A$1.83-per-share in cash to acquiring the outstanding stock that it doesn't already own, and it saw little chance of a rival bidder trying to a gatecrash a deal.

Shares in Royal Wolf peaked above A$3.70 in mid-2013 before falling steeply as resources companies curbed expenditure on new projects, hitting demand for containers at mine sites.

-Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

July 12, 2017 02:38 ET (06:38 GMT)