Australian stocks fall 0.8 pct banks gain

(Adds banks, updates indices)

SYDNEY, Nov 19 (Reuters) - Australian shares fell 0.8 percent on Wednesday as the resumption of short selling in non-financial stocks triggered falls in companies such as Woolworths Ltd (ASX: WOW.ax) , which had outperformed in the recent sharp downturn.

The benchmark S&P/ASX 200 index JO was down 28.6 points at 3,494.6 by 0402 GMT. The index had risen as much as 1.4 percent in early trade.

New Zealand shares also fell, with the benchmark NZX-50 index .NZ50 down 0.3 percent at 2,706.3.

STOCKS ON THE MOVE

* Australian banks bucked the downtrend with No. 1 lender, National Australia Bank (ASX: NAB.ax) rising 3.9 percent to A$19.90, and third-largest, Australia and New Zealand Banking Group (ASX: ANZ.ax) up 5.5 percent at A$13.76.

Westpac Banking Corp (ASX: WBC.ax) rose 2.6 percent to A$15.96, and Commonwealth Bank (ASX: CBA.ax) , the second largest, was up 0.3 percent A$30.20.

"We are seeing something of a readjustment in prices here today, mainly because of the fact that they have been sold off so heavily in recent weeks," said Jamie Spiteri, senior dealer at Shaw Stockbroking.

Although the ban on short selling non-financial stocks was lifted, shorting financial stocks is still banned until Jan. 27, which may have been another supporting factor.

"It certainly could be a contributor," Spiteri said.

0400 GMT

* Australian timber group Gunns (ASX: GNS.ax) came off earlier lows after saying its proposed Bell Bay pulp mill project in the island state of Tasmania remained on track, dousing earlier speculation that it had collapsed.

Its shares were still down 12.4 percent at A$0.92, but recovered from a low of A$0.83. For more see: [nSYU005558].

0329

* AED Oil Ltd AED extended gains to be up 5.1 percent at A$1.04 after saying it had a strong balance sheet and was eyeing acquisitions in Australia and the region. [nSYU005557].

0204 GMT

* Oz Minerals Ltd OZL, the world's second-largest zinc miner and a major supplier of copper, tumbled 15.1 percent to A$0.62 after warning of lower profits and possible asset writedowns. [nSYU005556].

0050 GMT

* Woolworths, Australia's largest supermarket chain, fell 0.5 percent to A$26.05 and Cochlear Ltd (ASX: COH.ax) lost 3.7 percent to A$53.10. JP Morgan had identified Woolworths and Cochlear as two stocks likely to be targeted by short sellers.

0022 GMT

* AWB Ltd (ASX: AWB.ax) , Australia's top grain marketer and agribusiness group, firmed 6.9 percent to A$2.79 after reporting a more than doubling of annual profit.

0022 GMT

* Building products maker CSR Ltd (ASX: CSR.ax) tumbled 19.2 percent to A$1.39 after completing a A$315 milling capital raising. [nSYU005553]

0023 GMT

* Babcock & Brown Ltd BNB slumped 21 percent to A$0.25 after on news that it had put about half its asset base up for sale and was seeking to renegotiate its bank debts. [nSYD425065].

0023 GMT

* But bigger rival Macquarie Group Ltd MQG jumped 5.4 percent to A$25.30, adding to Tuesday's 16 percent rise. Goldman Sachs JBWere upgraded Macquarie to buy from hold after first-half earnings came in above Goldman's estimates and the company said it was well funded and had a strong capital position.

0023 GMT ($1=A$1.54) (Reporting by Denny Thomas, Editing by Mark Bendeich)

More Quotes and Company Information:AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ASX: ANZ.ax)AWB LIMITED(ASX: AWB.ax)COCHLEAR LIMITED(ASX: COH.ax)COMMONWEALTH BANK OF AUSTRALIA.(ASX: CBA.ax)CSR LIMITED(ASX: CSR.ax)GUNNS LIMITED(ASX: GNS.ax)NATIONAL AUSTRALIA BANK LIMITED(ASX: NAB.ax)WESTPAC BANKING CORPORATION(ASX: WBC.ax)WOOLWORTHS LIMITED(ASX: WOW.ax) ... read full article
Wed 19th November 2008 - 03:16pm