Australian shares fell 0.6 percent on Wednesday, backing off from a five-year high reached in the morning, as miners slid further on lower iron ore prices and a cut in spending plans.
Weakness in resources shares offset gains in companies likely to benefit most from a drop in the Australian dollar.
The S&P/ASX 200 index lost 29.3 points to 5,191.7, according to the latest data. The benchmark edged 0.2 percent higher to a five-year closing high on Tuesday.
BHP Billiton Ltd and Rio Tinto Ltd dropped 1.9 percent and 3.1 percent, respectively, after the two largest miners said on Tuesday that they would slash billions of dollars of spending.
The top two miners had sent a negative message across the mining sector, analysts said, citing broad losses in miners.
"When the biggest company comes up with some sort of announcement or at least plans for something, it might affect the tone for the rest of sector," said Steven Daghlian, an analyst at Commonwealth Securities in Sydney.
BHP and Rio's spending-curb initiatives could also be a plus for investors, said Stuart Smith, a senior client advisor at Bell Potter Securities.
"My view is that they are creating a store of wares so that they can practise some capital management, and pay the long-suffering shareholders," Smith said, who blamed falling commodities prices for the miners' losses.
Spot iron ore prices fell on Wednesday to match their lowest level for the year as a soft Chinese steel market and expectations of increased supply pressured the steelmaking raw material.
Industrial stocks, particularly those relying on mining contracts, were hit hard on uncertain prospect for mining investments.
Engineering company UGL Ltd dived 17.0 percent to a four year low, after it said its 2013 net profit would fall to the range between A$90 and A$100 million, from its February forecast range of A$150 million and A$160 million.
Australia's biggest construction company Leighton Holdings Ltd tumbled 4.0 percent, and mining service company Emeco Holdings Ltd plunged 10.1 percent.
"They are not all very happy people, I can tell you," said Bell Potter's Smith, noting BHP and Rio's plans to cut back on contracts.
"We are just going through that transition period; we really don't know what is going to happen at the end of it," he said.
Australia's "big four" banks ended the session mixed. Top lender Commonwealth Bank of Australia gained 0.8 percent after posting an 8.6 percent rise in third-quarter cash profit.
Westpac Banking Corp was down 0.3 percent, and National Australia Bank edged down 0.1 percent.
_0">Companies with exposure to the U.S. market continued to benefit from the softer Australian dollar. QBE Insurance Group Ltd gained 0.8 percent, and the world's second-biggest wine company Treasury Wine Estates rose 1.6 percent.
_1">The Australian dollar hovered near multi-month lows on Wednesday against a buoyant greenback amid signs of an improving U.S. economy, in contrast to worries about a slowdown in China.
_2">Energy company Energy World Corporation Ltd surged 30.0 percent after it got $75 million of investment from Standard Chartered Private Equity on Tuesday.
_3">New Zealand's benchmark NZX 50 index ended nearly flat at 4,646.3, adding 0.5 point. (Reporting by Maggie Lu Yueyang; Editing by Sanjeev Miglani)
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