SYDNEY, Apr 23: Australian shares pared their gains on Tuesday as miners extended morning losses after a dip in Chinese manufacturing activity in April reinforced recent worries that the recovery in the world’s second-largest economy was losing momentum.
Growth in China’s vast factory sector dipped in April as new export orders shrank, a preliminary survey of factory managers showed on Tuesday, suggesting the economy still faces formidable global headwinds into the second quarter.
‘It was weaker than expected and the gains in the market have come off a little bit after the announcement,’ said Juliana Roadley, market analyst at Commonwealth Securities.
The data from China, Australia’s biggest export market, weighed on mining stocks and took some of the shine off other strong performers, such as energy and financials.
BHP Billiton Ltd was down 0.8 percent while Iluka Resources Ltd tumbled 2.9 percent. Rio Tinto Ltd fell 0.5 percent.
Weak metals prices also hurt sentiment in miners. Copper fell almost 1 percent on Monday, to trade close to 1-1/2 year lows at $6,935 a tonne amid disappointing global growth and higher supply prospects.
The S&P/ASX 200 index was up 46.6 points at 5,013.2 by 0214 GMT, pulling back from an earlier high of 5,036.5 after the Chinese PMI data. The benchmark rose 0.7 percent on Monday.
Woodside Petroleum Ltd soared 8 percent after its board declared a special dividend of $0.63 per share. Santos Ltd jumped 2.4 percent.
Financials underpinned the index, with Australia and New Zealand Banking Corp climbing 1.5 percent while Westpac Banking Corp added 1.7 percent.
Defensives were also firmer, with top telecoms provider Telstra Ltd gaining 1.6 percent.
The latest PMI release comes after data last week showed the recovery in China’s economy unexpectedly stumbled in the first quarter.
Still, some traders said the soft data allows room for policymakers in Beijing to provide further stimulus if necessary.
‘I think there’s always the potential, particularly where there’s low inflation in China, it gives authorities room to move to act with stimulus if necessary,’ said Martin Lakos, private wealth adviser at Macquarie Private Wealth.
New Zealand’s benchmark NZX 50 index climbed 0.7 percent or 32.7 points to 4,516.3.
STOCKS ON THE MOVE
* Newcrest Mining Ltd lost 2.9 percent to A$16.515 after the gold miner said it is reviewing its businesses related to higher cost production at a time of increased costs for the industry and a reduced gold price.
(0211 GMT)
* Virgin Australia Holdings Ltd soared 3.9 percent to A$0.45 after the government regulatory body, the Australian Competition and Consumer Commission (ACCC), said it would not oppose the airline’s proposed acquisition of 60 percent of Tiger Airways Australia Pty Ltd.
(0011 GTM)
* Evolution Mining slumped 2.9 percent to A$0.93 after it failed to meet its March quarter production targets.
(0012 GMT)
(AGENCIES)
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