By Hanna Paul
July 19 (Reuters) - Australian shares moved back into the black on Wednesday as gains by the 'Big Four' banks, who declared comfort with new capital rules, outweighed a tumble for BHP Billiton (LON:BLT).
The S&P/ASX 200 index .AXJO rose 37.91 points, or 0.7 percent, to 5,725.3 at 0237 GMT. The benchmark fell 1.1 percent on Tuesday.
The 'Big Four' banks, which account for more than 80 percent of the country's lending, leapt between 2.9 to 3.8 percent to touch their highest intra-day peaks in eight months after the Australian Prudential (LON:PRU) Regulation Authority (APRA) unveiled new rules designed to make the banks "unquestionably strong".
The authority said they were required to raise common equity Tier 1 ratio, a key gauge of a lender's strength, to at least 10.5 percent by January 2020. banks said they were well placed to meet the capital requirements. Spooner, chief market strategist at CMC Markets, said it was positive that banks get options for raising equity capital, "creating a bit of certainty for the market."
"This removes some of the worse concerns about the possibility that the banks will have to go to shareholders for additional capital in the near future," he said.
Financial stocks accounted for nearly three-quarters of the gains on the bourse and the benchmark index of financial stocks .AXFJ at one point was up 2.7 percent, its biggest intraday gain in nearly 36 weeks.
Weighing down the benchmark the most was global miner BHP Billiton BHP.AX . At one point, it dropped 2.6 percent to its lowest in four weeks, after reporting output declines in coal and petroleum for the year and flagging exceptional items of $546 million for the second half. stocks sagged as Rio Tinto (LON:RIO) RIO.AX extended losses, falling as much as 1.9 percent from the previous day after reporting disappointing production results.
New Zealand's benchmark S&P/NZX 50 index .NZ50 inched up 4.14 points, or 0.1 percent, to 5,725.5 at 0237 GMT.
The benchmark was little changed as losses consumer staples offset gains in financial and industrial sectors. A2 Milk ATM.NZ was the biggest decliner while Australia and New Zealand Banking Group ANZ.NZ and Westpac Banking Corp WBC.NZ led gainers.