* Financial sector top drag on benchmark
* Bank of Queensland first to defer dividend
* NZ reverses course to end higher (Updates to close)
By Nikhil Subba
April 8 (Reuters) - Australian shares closed marginally lower on Wednesday, with the heavyweight financial sector leading losses, as market participants fretted over the impending economic fallout from the coronavirus pandemic.
The S&P/ASX 200 index .AXJO settled about 0.9% lower at 5,206.90, after falling as much as 2.9% earlier in the session. The benchmark finished 0.65% lower on Tuesday.
Australian markets took a hit after global credit-rating firm Standard & Poor's lowered its outlook on the country's coveted 'AAA' rating to "negative" from "stable", saying the government's massive fiscal packages to cushion the economic blow from the pandemic could lead to a sharp rise in the country's debt position. the threat of prolonged economic downturn, the government is looking to pass an emergency A$130 billion ($80 billion) stimulus package to subsidise the wages of 6 million Australians. the country's unemployment rate expected to double to nearly 10%, most economists predict the worst recession in Australia's history.
"Government stimulus is about delaying the inevitable blow out in unemployment that started to rise in 2019. We are now going to have a substantial pop in unemployment, and once again in September as the subsidy rolls out," said Mathan Somasundaram, strategist at brokerage Blue Ocean Equities.
Meanwhile, adding to the broader gloom, Australia's prudential regulator asked banks and insurers to consider deferring dividend payouts. along with a downgrade by Fitch Ratings on all "Big Four" banks, led the Australian financial index .AXFJ to fall 2.8% at close - the day's biggest laggard. The "Big Four" lenders ended 3.33% to 5.3% lower.
Bank of Queensland BOQ.AX was the first to defer its interim dividend at its first-half earnings release earlier in the day. stocks .AXEJ closed 1.3% down, as all its components finished in negative territory. Industry behemoth Santos STO.AX slipped 0.2% at close, while Oil Search OSH.AX fell 3.4%.
Miners .AXMM shed about 0.8%, despite a rise in iron ore prices. The world's largest miner BHP Group BHP.AX settled 1.2% lower, while peer Rio Tinto (LON:RIO) RIO.AX tumbled 1.5%.
Gold stocks .AXGD shed earlier gains to fall 0.4% at close, as bullion prices fell due to concerns over rising deaths across the globe from the novel coronavirus.
Bellevue Gold BGL.AX dropped 4.9%, while OceanaGold OGC.AX declined 3.6%.
Across the Tasman sea, the New Zealand benchmark S&P/NZX 50 index .NZ50 finished 2.3% higher at 10,031.66.
Tourism, leisure and entertainment company SkyCity Entertainment SKC.NZ rose 8.8% while utilities provider Infratil IFT.NZ gained 7.2%.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ S&P cuts Australia's sovereign outlook, affirms AAA rating
S&P lowers Australia's 'AAA' outlook as lawmakers ready huge stimulus package
Australian regulator urges banks, insurers to defer dividends amid virus outbreak