Australia shares dip

However,analysts believe that the retreat is short-lived.

Australian stocks fell 0.5 percent from an 18-month high on Thursday after commodity prices dropped,but analysts saw it as only a temporary setback as corporate earnings growth prospects remained strong.

Fund managers and analysts said any retreat in the equity market would spur buying as Australian companies are expected to post at least 25 percent earnings growth over the next 18 months.

The only thing that will pull the market back significantly is problems in the bond market. The underlying fundamentals for equities are pretty good,said Don Williams,chief investment officer at Platypus Investment Management.

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He said the main factors that could spook the bond market would be sovereign debt problems in Europe or a string of poor bond auctions in the United States.

The benchmark S&P/ASX 200 index lost 23 points to close at 4,937.9,according to the latest available data.

New Zealand’s benchmark NZX 50 index also fell 0.5 percent to 3,307.8.

Top miner BHP Billiton fell 1.8 percent to A$43.75,while Rio Tinto fell 1.1 percent to A$80 after copper prices came off following a 10 percent rally over two weeks.

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Three of the top four banks fell more than 1 percent,while top home lender Commonwealth Bank of Australia ended up 0.8 percent at A$57.93.

Takeover targets snared most of the action,with Macarthur Coal rising 0.4 percent to A$14.36 on triple its average volume after its suitor Peabody Energy turned to Australia’s Takeovers Panel in hopes of buy time for its bid effort.

Lihir Gold,which last week rejected a A$9.2 billion offer from Newcrest Mining,was the most active stock,rising 1.8 percent to A$3.96 on triple its normal volume after gold prices rose.

But the stock held below the value of Newcrest’s offer,with investors seeing Newcrest as a more likely takeover target now.

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Hastings Diversified Utilities Fund jumped as much as 10 percent and ended up 7.4 percent at A$1.305 after APA Group,Australia’s biggest natural gas pipeline investor,increased its stake in HDF to 14.9 percent.

APA said it did not plan to make a takeover bid but would use its stake as a bargaining chip in case of any corporate action involving HDF,following a strategic review by Hastings.

Mining services contractor Macmahon Holdings jumped 7.6 percent to A$0.85,taking its gains to 17 percent over two days of heavy trading,which a dealer and a fund manager attributed to rumours that Leighton Holdings might make a bid.

Leighton,which owns 19 percent of Macmahon,said it was unaware of what had caused the spike in Macmahon’s shares. Macmahon Chief Executive Nick Bowen was not immediately available for comment.