Australia shares fall as worries over Mideast conflict escalate

Australian shares dropped to a more than two-week low on Thursday, across most sectors, as markets worried about reports of gunfire attacks in the Strait of Hormuz and dwindling hopes of a peace deal.

The S&P/ASX 200 index fell 0.3% to 8,816.30 by 0031 GMT, its lowest level since April 8.

The benchmark dropped 1.2% on Wednesday.

Top weighted financials lagged 0.9%, on track for a ninth-straight session of losses. The downbeat mood towards the sector comes as two of the four largest lenders - Westpac and National Australia Bank had flagged operational impacts this month due to war-driven market volatility.

No.1 valued lender Commonwealth Bank of Australia shed 1%, while ANZ lost 1.3%. Westpac and NAB dropped 1.1% and 0.8%, respectively.

Overall losses were limited by heavyweight miners BHP and Rio Tinto, which gained 0.6% and 0.8%, respectively. Both producers reported higher quarterly iron ore output earlier this week.

Rio and BHP helped the mining sub-index rise 0.4%, although gains were limited by gold stocks.

Energy stocks rose 2.2% and broke a six-day losing streak. Oil prices settled up by more than $3 after a surprise gasoline and distillate stock draw in the U.S. and reports of gunfire attacks in the Strait of Hormuz.

Shares of Santos surged as much as 4% after the major oil and gas producer reported sequentially higher quarterly production and sales revenue. Smaller producer Karoon Energy gained 4.4%.

Meanwhile, top fuel retailer Ampol surged as much as 3.6% to a one-week high after submitting a final remedy offer to Australia’s competition regulator, as it looks to secure approval to acquire EG Australia for A$1.1 billion($787.60 million).

New Zealand’s benchmark S&P/NZX 50 index fell 0.4% to 12,900.