(Reuters) - Australian shares ended Wednesday lower, weighed by materials and financials, as investors were wary of Prime Minister Malcolm Turnbull's shaky grip on power as he rejected resignations from seven cabinet members in a bid to headoff a renewed leadership challenge.
Turnbull was also forced to drop plans to cut company tax after parliament rejected the proposal, just a day after the he survived a leadership challenge from former Home Affairs Minister Peter Dutton in a party-room vote.
The benchmark S&P/ASX 200 index <.AXJO> slipped 0.3 percent to 6,266 on Wednesday, following Tuesday's 1 percent loss, when the narrow margin of Turnbull's victory heightened speculation that his leadership days were numbered.
"With leadership changes and disunity amongst the major parties having marked Australian politics for a decade now, the disruption is likely to be met negatively by business," ANZ analysts said in a note.
"If you're a foreign investor, suddenly Australia's looking a lot less attractive," said Hugh Dive, chief investment officer at Atlas Funds Management in Sydney.
Dive added that investors were paying attention to company-specific news amid the Australian earnings season and risks posed should Turnbull's fractured Liberal Party lose power, and give way to the Labour Party.
Australian financial stocks <.AXFJ> shed 1 percent, with wealth manager AMP Ltd <AMP.AX> down 1.7 percent as it traded ex-dividend.
AMP said on Wednesday that interim chief executive Mike Wilkins would be replaced by Francesco De Ferrari, who had been Credit Suisse's chief executive for Southeast Asia and frontier markets.
"I guess it is positive to have someone with overseas experience...I think that should be a positive move to get such a perceived high calibre candidate on board," Damian Rooney, director of equity sales at Argonaut.
Among other financials, Australia and New Zealand Banking Group Ltd <ANZ.AX> fell 1 percent while fellow lender National Australia Bank <NAB.AX> dipped 1.1 percent, resulting from "a bit of profit taking", according to Argonaut's Rooney.
The world's top miner, BHP <BHP.AX>, dipped 1.4 percent, less than the 1.8 percent fall suffered by fellow global miner Rio Tinto Ltd <RIO.AX>.
On Wednesday, mobile network provider TPG Telecom confirmed deal talks with Vodafone Group PLC's <VOD.L> Australian arm.
Shares of TPG <TPM.AX> jumped 21.6 percent while those of Hutchison Telecommunications (Australia) <HTA.AX>, a co-owner of the local Vodafone venture, soared 51.7 percent.
News of Coca-Cola Amatil <CCL.AX> reporting a 12.8 percent jump in half year profit and saying its was open to selling packaging unit SPC lifted the stock 3.6 percent.
Similarly, a 4.2 percent rise in Sydney Airport Holdings' <SYD.AX> interim profit attributable sent shares up 3.6 percent.
Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index <.NZ50> reached an all-time closing high, adding 0.5 percent to reach 9,162.61.
The benchmark ended a ninth of ten sessions higher, including a 0.1 percent rise on Tuesday.
Dairy firm a2 Milk Company Ltd <ATM.NZ> helped buoy the benchmark by gaining 6.1 percent on reporting full-year net profit which more than doubled, spurred by Chinese demand.
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(Reporting by Aaron Saldanha in Bengaluru, Additional reporting by Andrew Galbraith, Editing by Simon Cameron-Moore)
