August 7 (Reuters) - New Zealand's stock market rallied on Wednesday after the nation's central bank stunned investors with a steep 50 basis point rate cut, while Australian shares snapped a five-session losing streak, powered by safe-haven gold stocks.
New Zealand's S&P/NZX 50 index <.NZ50> finished 1.9% higher at 10,786.26. The benchmark rose sharply after the central bank jolted markets by cutting interest rates a steep 50 basis points and flagged the risk of going nuclear by taking rates below zero.
Energy retailer Mercury NZ <MCY.NZ> was the top gainer and closed at a record high.
The New Zealand move underscored how worried policymakers have become over the broadening impact of trade frictions.
Global risk assets were caught in a week-long sell-off after a dramatic escalation of the Sino-U.S. trade war, but a modicum of calm was restored when U.S. President Trump played down the prospects of the trade dispute being drawn out. [MKTS/GLOB]
Trump last week threatened further tariffs on Chinese goods, triggering the initial shakeout in markets which then went into a tailspin when Washington labelled Beijing a currency manipulator after it let the yuan slip past a key 7-per-dollar level to 11-year lows.
Signs of support for the yuan from China's central bank also helped ease investors' fears, though the currency slipped further in morning trade, keeping markets guessing.
Australia's S&P/ASX 200 index <.AXJO> ended 0.6%, or 41.4 points higher, at 6,519.5. The index tumbled 2.4% in the previous session.
Safe-haven gold stocks <.AXGD> rocketed to a record high close, as metal prices continued to rise on the uncertainty surrounding U.S.-China trade relations. [GOL/]
Gold miner Newcrest Mining <NCM.AX> rose 3.8% to hit its best level in nearly eight years, while peer St Barbara <SBM.AX> jumped 5.4% to end at a four-month high.
Australia's rare earths miners also rose against the backdrop of the trade war. China is the biggest supplier of rare-earths and it has previously hinted at limiting supply of these materials.
Rare earths miner Lynas Corporation <LYC.AX> gained 2.6%, while Northern Minerals <NTU.AX> and Alkane Resources Ltd <ALK.AX> were 1.6% and 1.3% higher, respectively.
On the downside, and reflecting the worries over demand, major mining stocks BHP Group Ltd <BHP.AX> and Rio Tinto <RIO.AX> closed 0.9% and 2.1% lower. China is the biggest buyer of Australian resources including iron ore and copper.
Energy stocks <.AXEJ> also remained subdued, with Woodside Petroleum <WPL.AX> closing 0.4% lower.
The banking index <.AXFJ> ended stronger but top lender Commonwealth Bank of Australia <CBA.AX> saw its worst close since early June after posting its first back-to-back annual profit decline in more than a decade, flagging further pain to margins from low interest rates and swelling costs. The stock lost 1.4%
(Reporting by Devika Syamnath in Bengaluru; Editing by Shri Navaratnam)
