* IT stocks sole gainer among major indices; touch record high
* Australia's No. 2 independent gas producer Santos set for worst session since June 29
* NZ dragged lower by healthcare stocks
By Deepali Saxena
Aug 20 (Reuters) - Australian shares fell on Thursday as investors feared government's decision to reject a China-backed company's offer to buy dairy firm could escalate tensions between the two nations, while bleak earnings in energy stocks further added to the gloom.
The Australian Financial Review reported that Australia will not approve China Mengniu Dairy Co's 2319.HK proposed buyout of some of the country's best-known milk brands from Japan's Kirin Holdings Co 2503.T . S&P/ASX 200 index .AXJO plunged 0.8% by 0051 GMT, erasing all the gains from the previous session. The benchmark closed at more than a five-month high on Wednesday.
Leading the charge, energy stocks .AXEJ were set for their worst session since July 31 as crude prices slipped over concerns of a second prolonged wave of the COVID-19 pandemic O/R .
Shares of sub-index heavyweights Santos STO.AX and Origin Energy ORG.AX dropped about 4% and 6% as energy companies reported a dip in underlying profits. stocks .AXMM tumbled to over a two-week low as the world's biggest producer of manganese, South32 S32.AX , reported an 80.5% slump in full-year underlying profit. stocks .AXGD fell nearly 2.6% led by Chalice Gold Mines CHN.AX , down 4.87%, followed by a 4.23% drop in Dacian Gold DCN.AX .
Meanwhile, Australia's second-most populous state of Victoria reported a small daily increase in new coronavirus infections with 240 cases over the past 24 hours. stocks .AXIJ were the sole gainers, jumping over 2.4% to touch a record high.
Shares of Afterpay APT.AX surged to an all-time high after the buy-now-pay-later firm raised its annual core earnings forecast. the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 dropped 0.4% as of 0057 GMT.
The country's biggest airport operator, Auckland International Airport AIA.NZ , dipped as much as 1.7% after it scrapped final dividend and posted a steep fall in full-year profit. Reserve Bank of New Zealand's balance sheet will continue to grow as it supports the economy and financial system in response to the COVID-19 pandemic, a senior official said on Thursday.