(Reuters) - Mining heavyweights Rio Tinto <RIO.AX> and BHP Billiton <BHP.AX> were the focal point of declines in Aussie shares on Thursday as commodity prices weakened, while the broader market retreated on fears of rising U.S. interest rates.
While testifying before the U.S. House of Representatives, Fed Chair Jerome Powell vowed on Tuesday to prevent the U.S. economy from overheating while acknowledging that the economy had strengthened recently, a remark that prompted investors to wager on four rate increases in 2018.
U.S. manufacturing and jobless claims data expected later should provide a further indication of the strength of the U.S. economy and potentially add to uncertainty over the tempo of interest rate hikes.
The S&P/ASX 200 index <.AXJO> fell 0.7 percent, or 42.7 points to 5,973.3 at the close of trade. The benchmark closed down 0.7 percent on Wednesday.
Rio Tinto, trading ex-dividend, marked its worst session in more than 10 ten months after dropping 4.1 percent. BHP closed 1.3 percent lower. Broader metals and mining stocks were also lower in line with metal prices.
Iron ore on the Dalian Commodity Exchange <DCIOcv1> dropped 0.55 percent to 543 yuan a tonne on Wednesday, while copper prices slipped to their lowest in two weeks.
Oil prices fell on Wednesday after official data showed a larger-than-expected increase in U.S. crude inventories, which weighed heavy on the Aussie energy index <.AXEJ>, causing a 2.2 percent drop.
Australia's "Big Four" banks closed between 0.2 percent and 0.9 percent lower.
Shares in commercial explosives maker Orica Ltd <ORI.AX> closed down 3.5 percent and near a three-month low after the company said its first half earnings before interest and tax would be hit by charges totalling A$300 million ($231.78 million)
New Zealand's benchmark S&P/NZX 50 index <.NZ50> closed down 0.4 percent, or 31.11 points, to finish the session at 8,342.71, snapping a six-session run of gains.
a2 Milk Co <ATM.NZ>, down 1 percent, was the biggest drag on the index after its recent stratospheric gains.
Skycity Entertainment Group <SKC.NZ> closed 2.1 percent lower after going ex-dividend.
Shares in struggling construction company Fletcher Building <FBU.NZ> closed 1.2 percent lower after it disclosed it had been granted a waiver on the breach of covenants under its U.S. private placement (USPP) funding arrangements.
(Reporting by Nikhil Kurian Nainan in Bengaluru)
