Aussie stocks extend losing run- short sales resume

(Adds details, analyst comment)

SYDNEY, Nov 19 (Reuters) - Australian shares fell 0.7 percent on Wednesday to a fresh four-year closing low as the resumption of short selling in non-financial stocks triggered falls in some companies which had outperformed in the recent sharp downturn.

The market has now declined over 6 percent this week but firmer banks offered some support, recovering some of their recent losses.

"It's the banks' day today. They have been beaten up so much they are just looking to be irresistable opportunities now," said Michael Heffernan, senior client adviser and strategist at Austock Group.

"They led us to a pretty resonable performance, by recent standards anyway, and helped offset the continuing weakness in the major resource stocks," Heffernan said, adding another choppy session was likely on Thursday.

The benchmark S&P/ASX 200 index JO lost 23.6 points to 3,499.6, based on the latest available data, adding to a 3.6 percent slide on Tuesday.

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

Australian banks bucked the downtrend with No. 1 lender, National Australia Bank (ASX: NAB.ax) rising 2.8 percent to A$19.68, and third-largest, Australia and New Zealand Banking Group (ASX: ANZ.ax) up 6 percent at A$13.82.

Westpac Banking Corp (ASX: WBC.ax) rose 4.5 percent to A$16.25, and Commonwealth Bank (ASX: CBA.ax) , the second largest, was up 2.8 percent A$30.93.

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

Global recession worries continued to hurt the major resource firms, with BHP Billiton Ltd (ASX: BHP.ax) down 4.1 percent to A$23.20 and Rio Tinto Ltd (ASX: RIO.ax) down 3.1 percent at A$65.90.

Australian investment firm Babcock & Brown Ltd BNB slumped 19.4 percent to A$0.25 after saying it had put about half its asset base up for sale and was seeking to renegotiate its bank debts. [nSYD425065].

Woolworths (ASX: WOW.ax) , Australia's largest supermarket chain, fell 4.4 percent to A$25.10 and the world's leading maker of hearing implants, Cochlear Ltd (ASX: COH.ax) , lost 3.9 percent to A$52.93.

JP Morgan had identified Woolworths and Cochlear as two stocks likely to be targeted by short sellers.

Australian timber group Gunns (ASX: GNS.ax) tumbled 17.6 percent at A$0.86 despite saying its proposed Bell Bay pulp mill project in the island state of Tasmania remained on track, dousing earlier speculation that it had collapsed [nSYU005558].

Oz Minerals Ltd OZL, the world's second-largest zinc miner and a major supplier of copper, tumbled 13.7 percent to A$0.63 after warning of lower profits and possible asset writedowns [nSYU005556]. ($1=A$1.54) (Reporting by Mette Fraende; Editing by James Thornhill)

More Quotes and Company Information:AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ASX: ANZ.ax)BHP BILLITON(ASX: BHP.ax)COCHLEAR LIMITED(ASX: COH.ax)COMMONWEALTH BANK OF AUSTRALIA.(ASX: CBA.ax)GUNNS LIMITED(ASX: GNS.ax)NATIONAL AUSTRALIA BANK LIMITED(ASX: NAB.ax)RIO TINTO LIMITED(ASX: RIO.ax)WESTPAC BANKING CORPORATION(ASX: WBC.ax)WOOLWORTHS LIMITED(ASX: WOW.ax) ... read full article
Wed 19th November 2008 - 05:11pm