Australia shares shed 0.2 pct as RBA's shift stings, earnings in focus

Reuters - UK Focus

(Adds analysis, quotes, stocks on the move)

SYDNEY, Feb 5 (Reuters) - Australian shares fell 0.2 percentin choppy trade on Wednesday morning, as some investorsstruggled to come to terms with the Reserve Bank of Australia's(RBA) decision to drop its easing bias.

A bounce on Wall Street helped the market recoup part of thelosses though the sting from Tuesday's RBA policy shift lent acautious air to trading.

Australia's central bank kept its main cash rate at a recordlow of 2.5 percent on Tuesday as widely expected, but itsurprised some traders by dropping its long-held easing bias onrates.

"The RBA dropping its easing bias is probably one of thereasons," said Chris Kimber, managing director at KimberCapital (Other OTC: CGHC - news) , identifying reasons around the market falling.

"The RBA looks to be on hold until the end of the year."

Bluechip resources and banks dragged the market lower.Commonwealth Bank of Australia (Other OTC: CBAUF - news) slipped 0.1 percentwhile Australia and New Zealand Banking Group fell 0.3percent to 5-1/2 month lows as the Federal Court ruled the bankwas wrong to charge its customers additional fees for late loanpayments.

Rio Tinto Ltd (Xetra: 855018 - news) slipped 0.1 percent and BHP Billiton (NYSE: BBL - news) Ltd lost 0.8 percent to its lowest point sincemid-October as investors weighed near-term supply tightnessagainst tepid U.S. and Chinese factory data and an emergingmarkets selloff.

The S&P/ASX 200 index lost 12.5 points to 5,084.6 by0109 GMT, hovering at 6-week lows. The benchmark tumbled 1.8percent in the last session in the biggest daily drop in sixmonths.

Elsewhere a handful of stocks among the defensive sectorfell, with consumer retail staple Wesfarmers Ltd dropping 1.5 percent while bio-tech firm CSL Ltd (Other OTC: CMXHF - news) lost1.4 percent.

"We're moving into the start of our reporting season, oftentimes there's been anticipation about what those results aregoing to be, so there's volatility there," said Tony Russell,senior equities adviser at RBS Morgans.

The benchmark is hovering some 50 points above a 4-month lowof 5,028.2 hit on Dec. 12, a low marked on worries about slowinggrowth in China and the U.S. Federal Reserve's tapering of itsmassive stimulus program.

U.S. stocks rebounded overnight, buoyed by encouragingearnings, as the market attempted to steady in the wake of itslargest selloff in months a day earlier.

Britain's Virgin Atlantic Airways will haltoperations between Sydney and Hong Kong from May 5 because theroute is no longer profitable, the company said. Shares in Virgin Australia Holdings lost 1.5 percent totrade at 2-year lows of A$0.33.

Antares Energy Ltd (Other OTC: AZZEF - news) tumbled 19 percent to 7-monthlows of A$0.415 after the company said it will continue itsfunding of its Northern Star development.

New Zealand's benchmark NZX 50 index edged 0.1percent higher to 4,806.5.

(Reporting by Thuy Ong; Editing by Shri Navaratnam)

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