SYDNEY: Australian shares fell 1.2 percent on Tuesday, weighed down by European credit rating worries which overshadowed the central bank cutting rates, positive news for retailers ahead of Christmas sales period.
The Reserve Bank of Australia cut its main cash rate by 25 basis points to 4.25 percent, the second easing in as many months as inflation slowed at home and Europe's debt crisis dragged on economic growth globally.
Some retailers pushed ahead after the central bank rate decision with David Jones up 2.1 percent and JB Hi-Fi up 0.9 percent, although Myer was down 1.5 percent.
Top banks slipped as Europe's debt outlook weighed on sentiment. Westpac was down 0.7 percent and NAB eased 1.0 percent, while ANZ bucked the trend, rising 0.4 percent.
Bank of Queensland was the first to move after the RBA, cutting its variable mortgage rate by the full 25 bps soon after.
Global miners BHP Billiton and Rio Tinto fell over 1.5 percent each.
Standard & Poor's said it may downgrade the credit ratings of virtually all euro zone countries, including top-rated nations such as Germany and France, as the region's debt crisis deepens.
The benchmark S&P/ASX 200 index slipped 53.6 points to 4,267 at 0406 GMT. The benchmark rose 0.8 percent on Monday for its sixth straight gain.
New Zealand's benchmark NZX 50 index dipped 0.3 percent to 3,291.5.
STOCKS ON THE MOVE
Shares in gold miner Newcrest slipped 4.3 percent to A$33.88 after gold fell 1.5 percent overnight on eurozone worries.
0403 GMT
Shares in Origin Energy fell 1.4 percent to A$14.68 after the company said it had agreed to acquire the Whirinaki plant in New Zealand's Hawke's Bay.
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