MELBOURNE: Australian stocks dropped 0.9 percent on Tuesday to a three-week closing low, led lower by banks and insurers after a strong quake hit New Zealand's second-biggest city of Christchurch, killing at least 65 people.
The 6.3 magnitude quake toppled buildings, sparked fires and raised investor concern over bank default and mounting insurance claims for the companies yet to recover from the devastating floods and storms in Australia.
"The existing (economic) recovery there is going to be pushed further out," said Lucinda Chan, division director at Macquarie Equities.
"The insurers are obviously going to be the stocks that are hurt the most and all the banks have all exposure to New Zealand," she said.
The top four Australian banks -- National Australia Bank, Commonwealth Bank of Australia, Westpac Banking Corp and Australia and New Zealand Banking Group , which run large New Zealand units, ended down between 1.5 percent and 1.8 percent.
Australian insurers --Insurance Australia Group, Suncorp and QBE Insurance -- were worse off, falling between 1.9 percent and 2.4 percent.
New Zealand's benchmark NZX 50 index fell 0.7 percent to 3,358.7, although it finished off its lows of 3,348.7. The New Zealand dollar fell by nearly 2 percent, partly on expectations for a further delay in rate hikes and as some market players even contemplated the chance of a rate cut after the quake.
Australia's benchmark S&P/ASX 200 index finished down 43.3 points or 0.9 percent at 4,856.7. It was the biggest one-day decline in a month.
Against the trend, market leader BHP Billiton rallied on an acquisition and after saying that A$5 billion of its planned share buyback would commence immediately.
BHP Billiton will buy Chesapeake Energy's holdings in Arkansas' Fayetteville shale natural gas field for $4.75 billion in cash, marking its entry into the shale gas business.
BHP shares ended up 1.6 percent at A$46.58 after hitting A$47.42 earlier in the day.
Elsewhere, earnings news dominated trade.
Steel producer OneSteel shares dropped 4.7 percent after its earnings report while larger rival BlueScope lost another 4.3 percent after falling 3 percent on Monday on weak earnings.
Shares in online job ads firm Seek dived 11.7 percent to A$6.24 despite posting improved first-half profits, as the results were below analyst expectations.
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