Cautious mood weighs on Australian shares

Australian shares held on to a slender lead by close on Friday despite a cautious mood among investors over prospects of continued monetary tightening that could drag major economies into a recession.

The benchmark S&P/ASX200 index closed 16.1 points, or 0.23 per cent higher, at 7151.8 in Friday's session.

The broader All Ordinaries ended up 15.7 points, or 0.21 per cent, at 7354.7.

But the benchmark was down 0.1 per cent for the week, its first loss after three straight weeks of gains.

Local traders took their cue from choppy overnight trading on Wall Street after hawkish remarks from US Federal Reserve officials about interest rates fed nagging concerns over the looming slowdown in global growth.

"Various countries inflation rates are lagging the US, central banks are still hawkish, the risk of a hard landing globally and in Australia remains high and geopolitical risks remain," AMP's head of investment strategy, Shane Oliver, said.

"So the ride for shares is likely to remain choppy and new short-term lows can't be ruled out."

The trend in the local market reflected the mixed mood, with interest-rate sensitive financial stocks performing well but the gains offset by losses in energy and mining.

Each of the Big Four banks closed in positive territory with investors seemingly reconciled to higher rates in coming months that will help the lenders expand their margins.

Insurers IAG, QBE and Suncorp also saw robust trading, climbing between 1.0-2.0 per cent.

Energy and mining shares were subdued, as oil prices are on track for a steep weekly decline over concerns about weakening Chinese demand and further US interest rate hikes.

Woodside shares ended nearly 1.0 per cent lower while Santos and Whitehaven Coal edged higher to close in positive territory.

Those same growth concerns weighed over mining stocks, with lithium and gold bearing most of the brunt.

Shares in BHP ended 0.3 per cent higher at $43.94 as investors cheered its revised $9.6 billion takeover offer for OZ Minerals that could give the world's biggest miner more exposure to battery minerals and add to its pipeline of growth options.

OZ shares also jumped 4 per cent to $27.34 after coming out of a trading halt but are still trading below the new offer price.

Rivals Rio Tinto and Fortescue closed 0.2 and 2.4 per cent higher respectively.

Among consumer stocks, dairy producers A2 Milk and Bega fell over 2 and 3 per cent respectively even as rival Fonterra divested its Chilean Soprole business for $1.1 billion, while jewellery retailer Lovisa's high-priced stock slid 7.3 per cent following a trading update by the company. 

Meanwhile, the Australian dollar was slightly weaker as hawkish Federal Reserve commentary gave its US counterpart a brief lift. The local currency was buying 67.05 US cents at 1700 AEDT, down from 67.25 US cents at Thursday's close.

ON THE ASX:

* The benchmark S&P/ASX200 index closed 16.1 points, or 0.23 per cent higher, at 7151.8 in Friday's session.

* The broader All Ordinaries ended up 15.7 points, or 0.21 per cent, at 7354.7.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 67.05 US cents, from 67.25 US cents at Thursday's close

* 93.74 Japanese yen, from 93.81 yen

* 64.64 Euro cents, from 64.73 Euro cents

* 56.36 British pence, from 56.46 British pence

* 108.83 NZ cents, from 109.50 NZ cents.