* Resource sector drops as iron ore continues to slump
* Market set to end 0.3 percent higher for May (Adds analysis, quotes, stocks on the move)
By Thuy Ong and Gyles Beckford
SYDNEY/WELLINGTON, May 30 (Reuters) - Australian shares weredown 0.3 percent on Friday morning, as an extended slide in ironore prices hit the index-heavy resource sector, though an uptickon Wall Street and Australian private sector credit helped limitthe downside.
Prices of iron ore, a major export for Australia, fell toits lowest level since September 2012 and look poised forfurther losses amid a deepening glut.
The world's no.4 iron ore miner Fortescue Metals Group Ltd tumbled 1.8 percent. Bellwether miners BHP Billiton Ltd and Rio Tinto Ltd (Xetra: 855018 - news) lost 0.5 percent and 1.1percent respectively, while Bluescope Steel Ltd dropped0.8 percent.
The S&P/ASX 200 index slipped 17.4 points to 5,502.1by 0222 GMT. The benchmark is set to add 0.2 percent for theweek and 0.3 percent for May.
On Wall Street, the S&P 500 index climbed to its thirdrecord closing high in four sessions overnight, while Australianprivate sector credit rose 0.5 percent in April, helping checkoverall selling interest..
"It has been really quiet in the past two weeks in terms ofconviction by investors both on the buy side and the sell sideso trading volume is even lower," said Martin Lakos, divisiondirector at Macquarie Bank.
Lakos said markets were also eyeing key GDP data and theReserve Bank of Australia's policy meeting next week for freshcatalysts.
The Australian benchmark touched a near 6-year high of5,54.5 on April 29, and has traded mostly sideways for May asthe slump in iron ore prices hit resource stocks, though overallmarket losses have been contained by demand for high yieldingbank stocks.
The housing sector edged higher, boosted by AustralandProperty Group which climbed 2.3 percent after issuinga profit upgrade on Friday. The upgrade came two days after thefirm received an increased takeover bid from larger rivalStockland Corp Ltd which valued it at A$2.5 billion.
Lynas Corporation (Berlin: LYI.BE - news) slumped 17.7 percent to A$0.14after the company underwent a share purchase plan with adiscounted price of A$0.113 per share. Lynas had closed atA$0.17 in the previous session.
New Zealand stocks were largely flat in subdued tradinggoing into a long weekend, with the benchmark NZX-50 index down 1.2 points at 5,181.96.
The most significant mover was dairy company Synlait MilkLtd, which tumbled 7.3 percent to a near-11 month lowof NZ$3.15, after it cut its 2015 profit forecast, as well asits indicative farmer payout.
(Editing by Shri Navaratnam)
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