Australia Shares Suffer Worst Week in Three Years

   By Ross Kelly 
 

SYDNEY--Australian stocks fell for the fifth consecutive day, capping their worst week in three years, after weak local economic data and heightened volatility in global financial markets shook investors' confidence.

The benchmark S&P/ASX 200 index ended Friday down 0.1% at 5498.5 points, bringing the week's losses to 4.8% and eroding most of the strong gains in early 2015.

Banking stocks were sold off heavily throughout the week amid expectations interest rates in the U.S and Europe would rise as their economies recover. But uncertainty over the strength of the U.S. economy and whether Greece can secure a bailout package contributed to a 0.9% fall in the Dow Jones Industrial Average overnight Sydney time.

Disappointing Australian retail sales and national-accounts data added to the gloom, as regulators question whether the country's record-low interest rates are causing a housing-market bubble.

"Investors continue to echo the idea of catching a falling knife, as the market scratches its head over when might be a good time to buy back into the financials," said Betty Lam, a Sydney-based trader at CMC Markets.

Some traders believe banks' dividend payments are starting too look attractive again, compared with their share-price values. "The financials aren't doing particularly well but I feel as the dividend yield rises, so will the interest in these names," said Stan Shamu, a Melbourne-based strategist at IG.

Shares of Commonwealth Bank of Australia (CBA.AU), Westpac Banking Corp. (WBC.AU), Australia & New Zealand Banking Group Ltd. (ANZ.AU) and National Australia Bank Ltd. (NAB.AU) fell 0.3%, 0.7%, 1.1% and 1.5%, respectively. Higher global interest rates can be bad for dividend plays because they make rival investment options such as bonds more attractive.

Key U.S. jobs data and a meeting of the Organization of the Petroleum Exporting Countries are due later in the day.

Australian energy stocks closed mixed ahead of the OPEC meeting, as members are expected to leave their production targets unchanged and continue flooding an over-supplied market with oil. Woodside Petroleum Ltd. (WPL.AU) shares rose 0.3% while Santos Ltd. (STO.AU) shares fell 0.6%.

The big diversified mining companies were also mixed after iron-ore prices continued its shaky recovery. BHP Billiton Ltd. (BHP.AU) shares fell 0.7% while Rio Tinto Ltd. (RIO.AU) shares rose 0.5%.

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