Australia Shares End Lower on Worries Over Fed Tapering

   By Robb M. Stewart 
 

MELBOURNE, Australia--Australian stocks fell to fresh more than one-month lows Thursday as signs of slowing manufacturing activity in China added to renewed worries about the U.S. central bank's plans to scale back its massive monetary stimulus measures.

Markets across much of Asia got off to a weak start as investors took the Federal Reserve's minutes for its October policy meeting as a signal that it will scale back its bond buying in the coming months as the economy improves. Later in the session, a preliminary gauge of manufacturing activity in China--Australia's biggest trading partner--showed a mild weakening of growth momentum in November.

The Chinese data and a resurgent U.S. dollar also weighed on the local currency.

"Investors are back to trading with more conviction, with a notable uptick in volumes today," said Betty Lam, a sales trader at CMC Markets in Sydney.

The benchmark S&P/ASX 200 finished the day 0.4% lower at 5288.3, its lowest point since Oct. 18.

Shares of gold producers were particularly hard hit, reacting to an overnight slump in the bullion price following the Fed minutes. Major banks, which have had a strong run higher for much of the year, were also lower.

Stan Shamu, market strategist at IG in Melbourne, said the main focus for the day was a slightly more hawkish tone from the Fed, which he added will increase the significance of upcoming jobs data for November for investors pondering when "tapering" of the stimulus program might begin.

"On the other hand, the minutes are a bit stale, and judging by the recent comments from some key Fed members, I still feel tapering in the first quarter of 2014 is the most likely outcome," Mr. Shamu said.

Gold miner Newcrest Mining closed 4% lower, while St. Barbara lost 9.2% and AngloGold Ashanti dropped 10%.

BHP Billiton added just one cent after staging the Australian leg of its annual shareholders' meeting, during which Chairman Jacques Nasser said he was confident that the U.S. economic recovery would continue and China's growth was likely to top 7% next year.

WorleyParsons lost a further 1.8%, adding to a sharp decline a day earlier after it reduced its earnings expectations for a second time this year.

Australia & New Zealand Banking Group and National Australia Bank both lost 0.3%, while Westpac fell 0.4% and Commonwealth Bank of Australia dropped 0.8%.

Write to Robb M. Stewart at [e-mail]