SYDNEY: Australian stocks fell 0.7 percent on Friday to their lowest close in two weeks, snapping a three-week winning streak as investors paused for breath amid expectation for tightening in China after higher-than-expected inflation.
China is Australia's top trade partner and further monetary tightening could hurt demand for natural resources.
Bank stocks fell, with No.4 lender Australia and New Zealand Banking Group leading the way with a 1.7 percent drop. Lingering sovereign debt troubles in Europe are seen hurting banks that rely on offshore debt for annual funding.
Top lender National Australia Bank fell 1.1 percent. NAB said it was experiencing some delays in updating customer accounts and it was working to rectify it. It was the second time in just a few months it experienced technical difficulties.
"We have just been drifting lower as investors are uncomfortable with current levels. More than selling there is just lack of buying," Ben Potter an analyst at IG Markets said.
He said US earnings will be guide trade next week.
The benchmark S&P/ASX 200 index fell 32.15 points, to 4,852.10 according to latest available data. The index dropped 1.8 percent for the week.
Global miner Rio Tinto slipped 1.1 percent and BHP Billiton fell 1 percent as metal prices slipped after China data showed strong economic growth and a 32-month high for March consumer prices.
Rio said the global market for iron ore will likely remain tight, thanks to strong demand and limited supply coming on stream.
Miner Macarthur Coal rose more than 2.5 percent to A$12.12 after it was upgraded to a buy by Credit Suisse, Barrett-Lennard said.
Contractor Leighton Holdings extended Thursday's 12 percent loss, easing 0.2 percent to A$24.88, after warning of a big full-year loss and embarking on a capital raising.
New Zealand tourism operator Tourism Holdings jumped 16.7 percent to NZ$0.7, after it said it had a received a partial takeover offer.
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