Australian shares gave up early gains to end lower on Thursday, as investors fretted over the possibility of a recession after the U.S. central bank delivered its biggest interest rate hike in 28 years to curb soaring inflation.

The S&P/ASX 200 closed 0.2% lower at 6,589.4 after rising as much as 1% earlier in the session, extending its fall to a fifth session.

The U.S. Federal Reserve approved a bigger but widely expected 75-basis-point rate hike on Wednesday to contain broadening inflationary pressure.

"The problem now is if we get a continuation of the rate rising, we run the risk of a severe economic downturn," said Brad Smoling, managing director of Smoling Stockbroking.

"It is a very precarious time for markets because central banks are walking a thin line between letting inflation run high and allowing economic stimulation."

In Australia, financial stocks reversed course to close 0.4% lower, with two of the 'Big Four' banks shedding about 0.5% each.

Healthcare stocks fell almost 0.9%, with index heavyweights CSL Ltd and Ramsay Health Care down about 1% and 1.3% respectively.

Mining shares rose 0.7% despite weak iron ore prices in China to break a four-day decline. Sector majors Rio Tinto and BHP added 0.6% and 0.1%, respectively.

Energy stocks climbed about 0.5% as Brent crude oil prices gained on tighter supplies.

Among individual stocks, Link Administration sank as much as 13.1% to a two-year low after the competition regulator flagged concerns about Canadian firm Dye & Durham's proposed $2.48 billion deal to buy the share registry company.

New Zealand's benchmark S&P/NZX 50 rose 0.1% to 10,646.58. (Reporting by Archishma Iyer in Bengaluru; Editing by Subhranshu Sahu)


Reuters