SYDNEY: Australian shares eased 0.1 percent in morning trade on Tuesday, although strength in financials supported the market after the index hit a three-week closing low in the previous session on worries over the health of the euro zone.
"Today's a little bit of make up territory, after we saw a bigger fall than expected yesterday," said Lucinda Chan division director at Macquarie Equities.
"The key thing is the financials, that's what's holding the market up, the telcos are also reasonably holding ground, materials are still soft and consumer discretionary still suffering." she added.
Chan said the market was still assessing the potential implications of news a day earlier that North Korea's leader, Kim Jong-il, had died.
Mario Draghi, president of the European Central Bank, said overnight that the economic outlook contained substantial downside risks, adding that 2012 would be a difficult year for banks.
Most retailers recouped some falls after bruising losses in the previous session. However, shares in surfwear firm Billabong continued to slide, losing another 14.8 percent after plummeting 44 percent on Monday to a record low after it warned that its first-half earnings would slump by 21-25 percent after a sharp downturn in Europe and Australia. Financials performed well in morning trade with Westpac up 1.1 percent and Commonwealth Bank up 0.8 percent.
The benchmark S&P/ASX 200 index slipped 5.3 points to 4,055.1 at 0111 GMT. The benchmark sank 98.9 points or 2.4 percent, on Monday.
New Zealand's benchmark NZX 50 index fell 0.4 percent to 3,211.7.
STOCKS ON THE MOVE
Shares in Gloucester Coal were put in a trading halt after sources said Chinese-controlled Yancoal Australia is in talks to buy Gloucester Coal, currently worth $1.4 billion, to create Australia's top independent coal miner.
Shares in Insurance Australia Group rose 0.2 percent to A$3.08. Australia's top car and home insurer said its 49-percent owned Malaysian associate plans to buy Kurnia Insurans (Malaysia) Bhd to make it the market leader in the Southeast Asian country's motor insurance market.
Shares in Australia's Newcrest Mining, fell 3 percent to A$30.13 after the world's third-largest gold producer on Monday cut its full-year output guidance by around 6 percent, citing disruptions and lower grade ore at mines in Papua New Guinea and Australia.
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