Australian Shares Trim Declines After Jobless Rate Tops Forecasts

Australian shares pared their losses on Thursday after data showed the unemployment rate rose more than expected. The S&P/ASX 200 index was down 0.8% at 8,693.30 as of 0200 GMT, having fallen as much as 1.4% earlier in the session.

The Australian Bureau of Statistics reported that net employment rose 39,500 in August from July, above market forecasts for a 20,000 increase. However, the jobless rate rose to a five-year high of 4.6%, above forecasts for a steady 4.5% climb.

Reserve Bank of Australia Governor Michele Bullock said that unemployment in a range of 4.5% to 5.0% could help restrain inflation. Market pricing was little changed following the data, with investors continuing to price in a 25-basis-point rate increase at the central bank's September 28-29 meeting.

The Reserve Bank of Australia's potential interest rate hike weighed on equities, which can raise financing costs for companies and lure buyers back into the bond market. BHP and Rio Tinto fell 2.1% and 0.7%, respectively, while resources was among the major laggards with a 1.8% drop.

Financials slipped 0.9% and were set for their steepest drop in more than a week, with all 'Big Four' banks declining between 1.1% and 1.7%. Rate-sensitive real estate and consumer staples stocks lost 1.5% and 0.3%, respectively.