* ANZ's lower franking credit hurting other major banks -analyst
* Macquarie posts record H1 profit, but sees weaker annual result
* Aussie index set for 1.4% weekly drop, NZ index down 0.4%
By Rashmi Ashok
Nov 1 (Reuters) - Australian shares slipped on Friday, pulled lower by heavweight banking shares after disappointing financial results from Australia and New Zealand Banking Group ANZ.AX .
The S&P/ASX 200 index .AXJO fell 0.3% or 20.9 points to 6,642.5 by 0013 GMT. The benchmark fell 0.4% on Thursday.
ANZ fell 2.6% to a more than two-month low and was the biggest loser among financials for a second session. Westpac Banking Corp WBC.AX was down nearly 2.2%, while top lender Commonwealth Bank of Australia CBA.AX lost 1.6%. National Australia Bank NAB.AX , which is set to report full-year results next Thursday, fell 1.3%.
ANZ on Thursday reduced franking credits on its final dividend payout to 70% as it reported second-half profits that missed market expectations. Franking credits allow shareholders to reduce or eliminate double taxation. appears there is now investor consternation that the other major banks may also reduce their franking percentages," Morgans analyst Azib Khan said in a note.
However, Khan said he considered that fear to be largely unjustified given the other major banks derive a greater proportion of earnings from Australia and had healthier surplus franking credit balances.
Investment bank Macquarie Group MQG.AX slipped 1.8% after it revealed a slump in traditional banking takings and forecast a weaker annual result on Friday, although it posted a record first half profit, driven by higher fees from its managed funds. concerns about a potential Sino-U.S. trade deal getting off the ground continued to weigh on shares.
Mining stocks .AXMM slipped, with global miners BHP Group BHP.AX and Rio Tinto (LON:RIO) Ltd RIO.AX falling 1.5% and 1.2%, respectively.
Safe-haven gold stocks .AXGD were snapped up in the midst of the uncertainty, with Newcrest Mining Ltd NCM.AX tacking on 3.4% while Northern Star Resources NST.AX added 4%.
Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.3% or 33.52 points to 10,754.84.
Contact Energy Ltd CEN.NZ fell 2.3%, while dairy giant a2 Milk Company Ltd ATM.NZ slipped 1%.