Australian shares fell 1.3 percent on Monday, pulled down by blue-chip banking and mining stocks in muted trade as iron ore and Chinese steel futures slumped, while UGL dropped after receiving only one bid for its real estate arm. The S&P/ASX 200 index lost 70 points to 5,409.0 at the close of trade, its biggest one-day percentage drop since mid-April. The benchmark fell 0.6 percent on Friday, but added 0.3 percent for the week.
Shares in UGL Ltd lost 9.7 percent. The Australian engineering and property management company will likely shelve the planned A$1.2 billion sale of its property services arm after it received just one binding offer for the asset, a source familiar with the process told Reuters. New Zealand's benchmark NZX 50 index slipped 0.4 percent to 5,167.8.
The 'Big Four' banks dragged lower with Commonwealth Bank of Australia and Westpac Banking Corp both losing 0.9 percent. Three of the 'Big Four' banks had touched record highs earlier in May on solid earnings results. "I think in the absence of any earnings information the market probably has drifted a bit," said John Milroy, investment adviser at Macquarie Bank. "I think it will remain choppy until we get some clear indications or more comfort around some of these high multiples. The key thing for a lot of investors here are these prices are a bit rich - is it being justified by earnings?"
Miners were pulled lower as Chinese steel futures touched a record low and iron ore fell 3 percent as supply outpaced fragile demand in the world's top market for both commodities, where lower economic growth has hit consumption. Bellwether miners BHP Billiton Ltd and Rio Tinto Ltd dropped 1.4 percent and 2.5 percent respectively. Elsewhere, Australian engineering and property management firm UGL Ltd received only one final bid for its real estate arm, leaving question-marks over its long-standing plans to sell the unit for about A$1.2 billion, a source told Reuters on Monday. Shares in UGL tumbled almost A$1 or 13 percent to a 2-1/2 week low of A$6.63.