MELBOURNE - Australian shares fell 0.2 per cent on Wednesday, after a profit warning from Richard Branson's Virgin Blue sent shockwaves through airline stocks and investors started to worry about consumer spending.
The benchmark S&P/ASX 200 ended down 9.4 points at 4,052.6, its lowest close in nearly two weeks.
InNew Zealand, the benchmark NZSX-50 Index .NZ50 slipped 2.9 points, 0.1 per cent, to 3,078.64 as heavyweight Telecom NZ fell 1 per cent and Fischer & Paykel Appliances slid 1.7 per cent.
Virgin Blue slashed its profit outlook following warnings from top travel agent Flight Centre, and retailers Miller's and New Zealand's The Warehouse Group.
"There's a bit of nervousness around the retailers as they come into the reporting season," said ABN AMRO Asset Management analyst Matthew Hoult.
"(The downgrades) are starting to focus people's minds on what is the likelihood of these people hitting their earnings targets and the likely price reaction should they miss."
* Top Australian airline Qantas ended down 3 per cent at A$3.51, while Virgin Blue recouped some early losses to end down 13 per cent at A$1.74. Virgin Blue's 46-per cent owner Patrick Corp sank 4.5 per cent to A$6.22.
* Among the retailers, Woolworths slid 1.8 per cent to A$14.40, Just Group fell 3.1 per cent, and Harvey Norman ended down 1.3 per cent.
* Takeover target Southcorp slipped 1 cent to A$4.50, while its hostile suitor, Foster's Group fell 1.3 per cent to A$5.30 on investor concerns about the wisdom of it expanding further in the low-return wine industry.
Stocks on the move earlier:
* Rupert Murdoch's News Corp.weighed on the Australian market, falling 0.8 per cent to A$22.96 after rival Liberty Media International said it would buy European cable provider UnitedGlobalCom Inc. for about $3.5 billion.
