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ASX loses ground on weak capex data

The ASX has closed lower. Picture: Michael O'Brien/The West Australian.

The Australian sharemarket reversed early gains after data showed plans for private sector capital expenditure next year had been slashed and March-quarter spending was much weaker than forecast

The S&P/ASX 200 rose following a positive lead from Wall street last night, but it reversed to a 0.5 per cent loss on the capex news, before lifting to close down 12.1 points, or 0.21 per cent, at 5713,1 as the weak data raised rate cut expectations and provoked yield hunting.

March-quarter capex fell 4.4 per cent, double the decline expected, while estimates for capex spending over 2015 and 2016 fell to $US104 billion, 24 per cent less than expected a year ago.

“The key takeout is the weakness of capex plans for 2015/16, raising debate about the need to downgrade economic growth forecasts for 2015/16,” Westpac economist Andrew Hanlan said.

“The survey reports that mining plans are for a rapid decline in capex spend and that the service sectors are looking to reduce investment.”

The Australian dollar tumbled US0.8¢ to US76.80¢ and government 10-year yields fell 7.5 points to 2.764 per cent on the softer yield outlook.

Last night the US S&P 500 rallied from the red on rumours, since denied, that Greece was close to a deal with the European Union.

European officials dismissed Greek Prime Minister Alex Tsipras’ statement that a solution was close, and German Finance Minister Wolfgang Schaeuble said he was surprised to hear reports of an imminent deal.

The Shanghai composite index was down 2 per cent at the close of the ASX as brokerages tightened lending restrictions.

In Tokyo the Nikkei initially climbed almost one per cent as the yen tumbled against the US dollar, but it reversed to trade marginally higher.

Spot iron ore rose 0.5 per cent to $US63.10 a tonne yesterday while Dalian iron ore futures were down 0.5 per cent today.

Bell Direct equities analyst Julia Lee said the disappointing capital expenditure figures had sparked a reversal of earlier gains following strong performances offshore.

"We experienced a surprising fall on the Aussie sharemarket,” Ms Lee said.

"Bad capital expenditure figures had an impact on the market."

Australian investors continued to be nervous and international markets and commodities prices would drive the local bourse on Friday, she said.

Among the big four banks, the Commonwealth Bank was down 63 cents at $83.50, ANZ rose 20 cents to $32.72, National Australia Bank lost 12 cents to $33.44, and Westpac was eight cents weaker at $33.12.

In the resources sector, global miner BHP Billiton was 14 cents weaker at $29.20, Rio Tinto rose 34 cents to $57.65, and iron ore pure play Fortescue Metals added seven cents to $2.43.

Woolworths rose seven cents to $28.01 as the retail giant signed up Telstra to help it offer mobile services direct to its customers.

Telstra was six cents lower at $6.15.

Meanwhile, testing and analytical laboratory services provider ALS dropped 39 cents to $6.10 after it reported a net loss of $174.5 million for the year to March 31, compared to a net profit of $154.4 million in 2013/14.

Accounting software group MYOB shed 12 cents to $3.47 as it bought a New Zealand payroll solutions company for $NZ14 million ($A13.15 million).

The broader All Ordinaries index was down 9.6 points, or 0.17 per cent, at 5714.6, according to preliminary figures.

The June share price index futures contract was 17 points lower at 5722, with 23,982 contracts traded.

National turnover was 2.13 billion securities worth $5.28 billion.