Australian shares slipped 0.5 percent on Monday, touching a three-week low on worries that a European Union summit this week will do little to resolve wrangling in Europe over whether to ease austerity measures. Concerns about how arguments between Germany and Greece and other embattled European economies will be resolved have sapped investor confidence, analysts said.
Volumes have also thinned ahead of the local market's financial year end on June 30. "With the EU summit scheduled for the back end of this week and investors having just five days left to conclude their tax loss selling... it's likely to be a painful grind, more than likely lower," said IG Markets analyst Cameron Peacock.
"There have been many such summits over the last two years, each of which has failed to deliver anything other than disappointment and confusion. There is absolutely no reason to expect this one to be any different," he added. Adding to the glum mood was a move by UBS to cut its earnings estimates for global mining houses BHP Billiton and Rio Tinto by between 3 and 4 percent due to next week's introduction of new mining and carbon taxes in Australia.
BHP fell 1.4 percent and Rio lost 0.2 percent. The benchmark S&P/ASX 200 index dropped 20.4 points to close at 4,027.8, having hit a low of 3,993.8. The benchmark dropped 1 percent on Friday and ended the week down 0.2 percent. New Zealand's benchmark NZX 50 index was flat, adding just 1.9 points at 3,401.1.
Shares in embattled surfwear retailer Billabong International dived 36 percent to a record low when they resumed trading after a heavily discounted share sale, just a few months after the firm rejected a $841 million private equity take-over. The shares lost 34.1 percent to A$0.96.
Shares in Fairfax slumped to a fresh low of A$0.555 on news the editors of two of its top mastheads, The Sydney Morning Herald and The Age, have quit as the publisher restructures. The shares closed down 1.7 percent at A$0.57. Elsewhere in the rapidly consolidating media sector, Consolidated Media shares rose 0.9 percent on the prospects of a bidding war for the pay-TV investor. Australia's competition watchdog revealed ConsMedia's 24 percent stakeholder Seven Group Holdings is considering making a take-over offer that would challenge a $2 billion bid from News Corp. Seven shares fell 5 percent.
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