March 20, 2019 / 1:51 AM / 5 months ago

Australia, NZ shares down as trade talks, Fed in focus

* Miners hurt Aussie benchmark

* Fed’s 2-day policy meeting outcome awaited

* NZ extends declines to second session

By Shanima A

March 20 (Reuters) - Australian shares eased on Wednesday as investors adopted a cautious approach after reports of tensions in U.S.-China trade talks and ahead of the outcome of a Federal Reserve policy meeting later in the day.

The S&P/ASX 200 index dropped 0.3 percent or 17.6 points to 6,164.3 by 0106 GMT, having declined 0.1 percent on Tuesday.

A Bloomberg report that China, Australia’s biggest trading partner, is balking at some American demands in trade talks put a dent in U.S. shares overnight.

Many investors were also keeping to the sidelines as they awaited the outcome of the Fed’s policy review later in the global day, with markets expecting the central bank to affirm its ‘patient’ approach to interest rate hikes.

Some analysts flagged the risk of the Fed striking a less dovish stance.

“Positivity about risk that drove the rally from late December and early January could be bookended by Wednesday’s FOMC meeting being a little less dovish than folks think,” said Greg McKenna, strategist at McKenna Macro in a note.

Resource stocks fell as much as 1.9 pct. Iron ore miners Rio Tinto and Fortescue Metals Group Ltd dropped more than 3.5 percent each after Brazilian miner Vale SA said on Tuesday that a local court had cleared the way for it to resume operations at its Brucutu mine. Production at Brucutu has been halted since early February.

The financial index eased 0.3 percent, after it slipped to a near 4 week trough during the session, with the Commonwealth Bank of Australia down 0.7 pct.

Shares of Nufarm Ltd were among the worst performers on the ASX 200 after the agricultural firm swung to an interim loss and flagged lower annual earnings due to dry weather. The stock plummeted 18.4 percent.

Financial services company Eclipx Group was the top percentage loser on the index, tanking more than 50 percent, after its peer McMillan Shakespeare withdrew its offer for Eclipx.

In New Zealand, losses in financials and utilities stocks pulled the benchmark S&P/NZX 50 index down 0.6 percent or 53.4 points to 9,443.9 at 0055 GMT.

Dairy processing company Synlait Milk Ltd was the largest loser on the benchmark index, falling 11.5 percent, after it posted a 10 percent fall in its first-half profit.

Reporting by Shanima A in Bengaluru Editing by Shri Navaratnam

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