Stocks dip for second day

The local bourse has been weighed by banks and miners, despite paring losses in afternoon trade.

The Australian sharemarket has ended lower for a second day despite paring losses in afternoon deals.

The weakness could be pinned on the big miners and banks after a rough session on offshore markets overnight.

At the closing bell, the benchmark S&P/ASX 200 index had fallen 30.5 points, or 0.58 per cent, to 5,197.5, while the broader All Ordinaries index eased 28.1 points, or 0.53 per cent, to 5,284.7.

At one stage through the session the benchmark was off 1.3 per cent, with bargain-hunting among the big four banks key to its modest rebound.

Despite the late recovery, the big banks ended off between 0.6 per cent and 1.9 per cent, with NAB the leader and ANZ the laggard.

During the session it looked a lot bleaker as ANZ tumbled 3.1 per cent around lunchtime and the rest of the big four were all off at least 1.5 per cent at one stage.

Concerns around the big banks relate to a number of issues including political uncertainty, pressure on margins and the prospect of more capital raisings.

A 3 per cent slump in European bank stocks overnight exacerbated the anxiety, with Italy seen as a potential drag` on markets in the months ahead.

“Markets are becoming increasingly concerned about Italy’s banks and the referendum on its Senate reforms in October,” CMC Markets chief market analyst Ric Spooner said.

“The worst case scenario for markets would be the forcing of another Eurozone emergency where the referendum is lost leaving Italy without effective government and a looming banking crisis that can’t be solved without compromise between the different national interest groups within Europe.”

In mining, BHP Billiton slumped 3.8 per cent to $18.71, while rival Rio Tinto slid 2 per cent to $46.81 after base metals skidded lower overnight.

Iron ore group Fortescue dipped 1 per cent to $3.79 despite iron ore prices holding near two-month highs.

The gold sector bucked the trend in the broader materials space, as the precious metal struck a new two-year high.

Local giant Newcrest surged 3.2 per cent to $25.92, while Regis Resources bounded 4.6 per cent to $3.87.

The energy sector weighed on the market as crude prices fell on global growth concerns.

Santos dipped 3.2 per cent to $4.57, while Woodside Petroleum lost 0.64 per cent to $26.33.

Elsewhere, Telstra added 0.73 per cent to $5.55, while Qantas drifted down 1.4 per cent to $2.75, Virgin added 2.5 per cent to 20.5c as more details of writedowns were announced and Godfreys lost 1 per cent to $1.04 after its chief executive surprisingly stepped down.

The vacuum cleaner retailer had plunged as much as 10 per cent before the reaffirmation of profit guidance calmed nerves.

The Australian dollar rebounded to US74.4c at the end of the local session but was still down more than half a cent from 24 hours prior.