Australia shares hit 2 year lows on Fed pressure; NZ turns up

Australian shares slipped to over two-year lows on Thursday as the Federal Reserve's decision to keep raising US borrowing costs at a time of slowing global growth rattled investors.

The S&P/ASX 200 index slumped 1.3 per cent to end the day at 5,505.80, its lowest since Dec 8, 2016.

The Fed raised interest rates on Wednesday as expected. While it signalled two rate hikes in 2019, down from three in its previous forecasts in September, policy makers' commitment to keep tightening in the face of slowing growth knocked risk asset markets including Wall Street and Asian stocks.

The dimming outlook for the global economy, coupled with oversupply worries, toppled oil prices and the Australian energy index by 1.8 per cent at the close, its lowest since Oct. 20 last year.

Oil and gas company Woodside Petroleum fell 1.7 per cent to a more than eight-month low, while Oil Search Ltd lost 1.2 per cent, to its lowest since Sept 2017.

Similarly, Australia's mining and metals index tumbled 3.2 per cent to a one-week low, as stocks were hit by sliding metal prices.

Aluminium prices sank to a 16-month nadir after the United States said it would withdraw sanctions on Russian aluminium producer United Company Rusal and its parent En+ .

Aluminium producer South32 ended 4.8 per cent down, lowest since Dec 12, while mining giant BHP Group, which is heavily exposed to copper markets, fell 1.7 per cent.

Financials fell 1.1 per cent to its lowest since Feb 10, 2016, with all the 'Big Four' lenders trading in the red.

In New Zealand, the benchmark S&P/NZX 50 index managed to add 0.1 per cent to end at 8772.19, after trading the better half of the day lower on data that showed domestic economic growth slowed to a five-year low in the third quarter.

SkyCity Entertainment Group led gains on the benchmark, rising 2.9 per cent, followed by Spark New Zealand which rose 2.6 per cent. (Reporting by Nikhil Subba in Bengaluru Editing by Shri Navaratnam)

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