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Bank levy battle weighs on share market

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Published on: Friday, May 12, 2017

The Australian share market has closed around 0.7 per cent lower as the stoush between the Turnbull government and the big banks over a proposed $6.2 billion levy on big financial institutions weighed on investors' minds.

Phillip Capital senior client adviser Michael Heffernan said most of the market, except for some of the big miners, was weaker on Friday.

Most of the big banks closed lower despite recovering some of their earlier losses as the battle with the government over the surprise levy included in Tuesday's federal budget escalated on Friday.

"When you get fighting going on between a major sector of the economy and the government, it's not good and people don't like that sort of stuff, and it does have an effect on (the market)," Mr Heffernan said.

"It's not a major, catastrophic effect, but it's just a niggling negative."

The banking lobby on Friday demanded to see the numbers Treasurer Scott Morrison used to justify the levy on the the nation's biggest financial institutions.

The banking sector has lost ground over several days as investors worry about the potential impact of the proposed impost on Australia's five biggest banks.

Commonwealth Bank was 0.5 per cent lower at $81.67, Westpac fell 0.2 per cent to $32.57, ANZ eased 0.3 per cent to $29.22, but National Australia Bank added 0.1 per cent to $32.33.

Investment bank Macquarie Group retreated one per cent to $92.63.

Energy stocks were also lower as they failed to respond to a rally in the oil price.

Woodside Petroleum, Santos and Oil Search fell between 0.6 per cent and 1.4 per cent.

Higher iron ore and copper prices helped boost BHP Billiton and Rio Tinto by 0.6 per cent and 0.4 per cent respectively but Fortescue Metals was down 2.7 per cent for the day.

Gold miner Newcrest lifted by 2.4 per cent to $20.68 despite lowering its 2017/18 production guidance for the Cadia gold mine in NSW due to damage from last month's earthquake.

Among other stocks, stricken legal firm Slater and Gordon surged 1.7 cents - a 19.3 per cent gain - to 10.5 cents after it said it is planning a $1 billion claim for fraud against the company from which it acquired its troubled UK business.

Monash IVF backtracked 3.9 per cent to $1.99 after the fertility services provider said its chief executive James Tiedeman had tendered his resignation.

Meanwhile, the Australian dollar was stronger at 73.77 US cents at 1700 AEST, compared to 73.65 US cents on Thursday, after signs of slight weakness in the greenback.

ON THE ASX:

* At 1630 AEST, the benchmark S&P/ASX200 was down 41.4 points, or 0.7 per cent, at 5,836.9 points

* The broader All Ordinaries index was down 41.1 points, or 0.7 per cent, at 5,870.9 points.

* The June SPI200 futures contract was down 55 points, or 0.94 per cent, at 5,810 points.

* National turnover was 2.1 billion securities traded worth $5.5 billion.

CURRENCY SNAPSHOT AT 1700 AEST:

One Australian dollar buys:

* 73.77 US cents, from 73.65 on Thursday

* 83.926 Japanese yen, from 83.04 yen

* 67.93 euro cents, from 67.72 cents

* 57.30 British pence, from 56.95 pence

* 107.91 New Zealand cents, from 107.45 NZ cents

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,227.60 per fine ounce, up $US5.90 from $US1,221.70 on Thursday

BOND SNAPSHOT AT 1630 AEST:

* CGS 4.50 per cent April 2020, 1.8032pct, from 1.828pct on Thursday.

* CGS 4.75 per cent April 2027, 2.6279pct, from 2.654pct.

Sydney Futures Exchange prices:

* June 2017 10-year bond futures contract at 97.33 (implying a yield of 2.67pct), from 97.315 (2.685pct) from Thursday

* June 2017 3-year bond futures contract at 98.140 (1.860pct), from 98.130 (1.870pct).

(*Currency closes taken at 1700 AEST previous local session, bond market closes taken at 1630 AEST previous local session)


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