Updates to market close
Australia's benchmark ASX200 slips 0.6% amid trade war fears
Banks fall 0.5%, miners fall 0.7%
New Zealand benchmark falls 0.6%
By Nikita Maria Jino
March 4 (Reuters) - Australian shares fell on Tuesday, dragged by heavyweight banking and mining stocks, as investors braced for an escalation in a global trade war with fresh U.S. tariffs on its trading partners taking effect.
U.S. President Donald Trump's new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20%, launching new trade conflicts with the top three U.S. trading partners.
Canada and Mexico are poised to immediately retaliate, while China swiftly announced 10%-15% hikes to import levies covering a range of American agricultural and food products.
The S&P/ASX 200 index .AXJO fell 0.6% to close at 8,198.1 points. The benchmark declined as much as 1.2% in early trade.
Though China's response to U.S. tariffs has been "fairly measured" so far, the risk for Australia lies in how China, the country's top trading partner, retaliates, said Tony Sycamore, market analyst at IG Australia.
Any escalation in a trade war between China and the U.S. will be detrimental to demand for Australian products, particularly for metals which make up a sizeable revenue for the federal government.
Miners .AXMM dipped 0.7%, with mining giant BHP BHP.AX declining 0.3%.
Financial stocks .AXFJ slipped 0.5%, led by National Australia Bank NAB.AX and Macquarie Group MQG.AX falling 0.8% and 1.2%, respectively.
Minutes of the Reserve Bank of Australia's $(RBA)$ February meeting showed the central bank board cut interest rates mainly due to the risk of keeping policy too tight for too long, but a strong labour market made it cautious about the chance of further easing.
ANZ analysts expect only one more rate cut in this cycle, likely in August, and predict the risks to that view are starting to "look a little more offshore than domestic," they said, adding that "should the global environment deteriorate, then additional RBA easing may become necessary".
Healthcare stocks .AXHJ, which rely on exports for revenue, were an outlier, rising 0.3%, as the Australian dollar slipped. Biotech giant CSL CSL.AX, with operations in the U.S., gained 1%. AUD/
New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.6% to end at 12,469.71 points.
(Reporting by Nikita Maria Jino in Bengaluru; Editing by Varun H K)
((Nikita.Jino@thomsonreuters.com))
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