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Australian shares tread water for second day

The local share market has finished little changed for a second day in a row, with sharp losses by the big banks balanced by gains by the major miners.

The benchmark S&P/ASX200 index finished Thursday up 3.9 points, or 0.05 per cent, to 7,255.4, while the broader All Ordinaries gained 3.9 points, or 0.05 per cent, to 7,460.

City Index analyst Matt Simpson said the ASX200 had found support about the 7,200 level following Monday's 1.1 per cent sell-off but was now trending sideways.

"It's just lacking a bit of a catalyst to make it go one way or the other," he told AAP.

"Earnings have died down, so we've lost that volatility catalyst," he added, referring to first-half earnings reports issued by many major Australian corporations last month.

"And at the same time, you've got Wall Street trading lower, but the ASX is holding above key support. It's not enough to drag it down, but there's nothing else to drag it up.

"So it's a bit of a frustrating one for all - we're just waiting for that catalyst."

That might not come until Tuesday, when the Reserve Bank holds its next meeting. Another 25 basis point rate hike is widely expected - which would take the cash rate to an 11-year high of 3.6 per cent - but the commentary the central bank issues around the path of future hikes will be closely watched.

The mining and energy sectors were the only ones in the green on Thursday, climbing 2.9 and 1.4 per cent, respectively, following Wednesday's release of economic data showing a big lift in Chinese factory activity last month.

BHP and Rio Tinto both gained 4.0 per cent, to $48.05 and $124.44, respectively, while Fortescue added 4.3 per cent to $23.06 and South32 climbed 5.2 per cent to a two-week high of $4.70.

But in the financial sector, the big banks were hitting their lowest levels in months after S&P Global Ratings warned Australian mortgage arrears were rising following nine consecutive interest rate hikes and climbing cost of living pressures.

"While arrears remain below long-term averages, we expect them to continue to rise because mortgage repayments make up an increasing share of household income," the rating agency said.

CBA dropped two per cent to $97.07, its lowest level since October, just a month after it hit an all-time high above $110.

ANZ fell 2.7 per cent to a nearly two-month low of $23.71, NAB was down 1.9 per cent to a five-month low of $28.83 and Westpac had retreated two per cent to a four-month low of $21.64.

Macquarie was down 2.1 per cent to $184.86 as Sky News reported it was weighing a PS5 billion ($A9 billion) bid for British money manager M&G.

Consumer staples were down as well as Coles and Woolworths traded ex-dividend. Woolies fell 1.4 per cent to $36.25 while Coles was down 3.2 per cent to $17.42

In the energy sector, coalminer Whitehaven rose 4.1 per cent to $7.52 and peer New Hope grew 4.4 per cent to $5.69, while oil and gas giant Woodside climbed 2.2 per cent to $37.59.

The market was also digesting a slump in building approvals, which the Australian Bureau of Statistics reported Thursday fell in January to their lowest level since June 2012.

But economists with NAB and J.P. Morgan cautioned the result was probably overstated by the impact of the January holidays resulting in a slower rate of application lodging and processing.

The Australian dollar was buying 67.38 US cents, from 67.58 US cents at Wednesday's ASX close.


* The benchmark S&P/ASX200 index finished Thursday up 3.8 points, or 0.05 per cent, at 7,255.4.

* The broader All Ordinaries gained 3.9 points, or 0.05 per cent, to 7,460.


One Australian dollar buys:

* 67.38 US cents, from 67.58 US cents at Wednesday's ASX close

* 92.05 Japanese yen, from 92.16 Japanese yen

* 63.32 Euro cents, from 63.76 Euro cents

* 56.20 British pence, from 56.10 pence

* 108.22 NZ cents, from 108.59 NZ cents.