Australian shares pared earlier gains and dropped 0.7 percent in late morning trade on Wednesday, as miners deepened their losses on weaker metal prices and offset gains in companies likely to benefit most from weakness in the Australian dollar.
BHP Billiton Ltd and Rio Tinto Ltd dropped 2.2 percent and 3.1 percent respectively, after the two largest miners said on Tuesday that they would slash billions of dollars of spending.
"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," said Stuart Smith, a senior client advisor at Bell Potter Securities.
"That should be a big plus, (but) the only determinant is that the copper price was down," he added.
Copper fell more than 2 percent on Tuesday as poor factory output data from China, the top user of the metal, fed fears that demand growth was stalling even as inventories rose.
The S&P/ASX 200 index lost 36.2 points to 5,186.1 by 0157 GMT. The benchmark edged 0.2 percent higher to notch a five-year closing high on Tuesday.
The market ignored the struggling Labor government's budget on Tuesday night, which delayed a long-promised return to surplus due a dramatic fall in revenues attributed to the stubbornly high Australian dollar and lower commodity prices.
Commonwealth Bank of Australia, the country's top lender by market value, retreated 0.1 percent after posting an 8.6 percent rise in third-quarter cash profit.
Australia's "big four" banks all lost ground in late morning trade, with National Australia Bank shedding 0.6 percent.
Stocks with exposure to the U.S. market continued to benefit from the softer Australian dollar. QBE Insurance Group Ltd gained 0.7 percent, and pharmaceutical products maker CSL Ltd was 0.1 percent higher.
The Aussie extended losses to $0.9896 after touching a new 11-month low overnight. The currency has fallen about 4 percent in the past 10 days.
"I don't think Australia can support a currency around parity with the U.S. dollar. It looks like it is finally starting to break, which is positive for the economy as a whole," said Aaryn Nania, an advisor at Cannacord Wealth Management.
New Zealand's benchmark NZX 50 index slipped 0.2 percent to 4,638.6.
STOCKS ON THE MOVE
* Engineering company UGL Ltd dived 15.7 percent to A$8.07, its biggest one-day percentage loss in more than five years, after it said it expected its 2013 net profit to be between A$90 and A$100 million. That is a significant downgrade from its February forecast range of A$150 million and A$160 million.
_0">(0140 GMT)
_1"> _2">* Energy company Energy World Corporation Ltd surged 35 percent to a one-month high of A$0.41, after it got $75 million of investment from Standard Chartered Private Equity on Tuesday.
_3">(0149 GMT)
_4">(Reporting by Maggie Lu Yueyang; Editing by Stephen Coates)
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