Australian shares fell 1.2 percent on Friday as falling iron ore prices encouraged investors to sell mining stocks, putting the index on track for the second-largest weekly loss this year. The S&P/ASX 200 index lost 69.6 points lower to end the session at 5,877.9 and was set to end the week 1.4 percent weaker. It has been unable to break a key psychological level of 6,000 points.
New Zealand's benchmark NZX 50 index eased 0.3 percent lower or 20.3 points to finish the session at 5,861.4.
The mining sector led losses, with volatile Fortescue Metals off 5 percent as investors opted to book profits following Thursday's jump. BHP Billiton and Rio Tinto also slipped between 1.2 and 2 percent as iron ore prices remained under pressure around $50 a tonne. Financials were on the defensive with the "Big Four" banks - Commonwealth Bank of Australia, Westpac Banking Corp, ANZ Banking Group and National Australia Bank - all off around 1 percent.
"It's due to a combination of some profit taking and repricing of the Reserve Bank of Australia's interest rate cut in May," said Ben Le Brun, market analyst at OptionsXpress.
Swap markets are giving a 60 percent chance of the RBA cutting its policy rate from 2.25 percent to 2.0 percent in May, down from 76 percent earlier in the week.
The energy sector was among the very few outperformers, defying a drop in oil prices. Engineering group WorleyParsons soared 12 percent while Karoon Gas gained 2.7 percent. Auckland International Airport rose 1.3 percent to NZ$62, closing in on a lifetime high of NZ$4.69 hit earlier in the week as an expansion in long-haul flights operated by Air New Zealand was seen boosting the country's largest airport.
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