Australian shares dropped 1.5 percent on Monday as investors remained anxious about the Federal Reserve's plans to taper monetary stimulus and slowing growth in China, causing financial and mining stocks to fall. "Traders are still not warming to the idea of QE tapering as put forward by Bernanke last week," said Tim Waterer, senior trader at CMC Markets.
Financials dragged, with top lender Commonwealth Bank of Australia slipping 0.5 percent while National Australia Bank Ltd dropped 1 percent. Westpac Banking Corp fell 0.6 percent. BHP Billiton Ltd dropped 3.4 percent while rival Rio Tinto Ltd lost 2.1 percent. Newcrest Mining tumbled 7.9 percent to near 10-year-lows of A$9.53, in an almost uninterrupted decline since 2011.
Rio Tinto has scrapped the proposed sale of its $1.3 billion diamonds business, a setback for its plan to sell a collection of mines and company stakes to tighten operations during a global industry downturn. The S&P/ASX 200 index dived 69.7 points to close near 10-day lows at 4,669.1. The benchmark fell 1.1 percent last week. New Zealand's benchmark NZX 50 index finished flat or up 1 point to 4,364. The local bourse fared slightly better than the rest of the region. MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.8 percent, after last week being it worst since May 2012 with a drop of 4.5 percent.