(Updates to close)
April 6 (Reuters) - Australian shares closed down on Thursday, pressured by signs the U.S. Federal Reserve may trim its massive asset holdings earlier than expected and a highly anticipated meeting between the U.S. and Chinese presidents later in the day.
The cautious mood weighed on Wall Street overnight and dragged down regional markets, denting the S&P/ASX 200 index by 0.34 percent to 5,856.30 at the close of trade.
Minutes from the March Fed meeting showed most policymakers thought the U.S. central bank should take steps to begin trimming its $4.5 trillion balance sheet later this year. Wall Street banks had expected no changes until mid-2018.
Australian banks, which have been under selling pressure in the past week as regulators stepped up curbs on home lending, fell 1 percent. The “Big Four” gave up 0.9 to 1.4 percent.
Australia’s banking watchdog said on Wednesday that authorities can and will take further action if needed to stop a debt-fuelled bubble in the country’s red-hot housing market.
Banks are in focus “as investors assess the possibility of banks being required to increase capital to support housing loans,” said Ric Spooner Chief Market analyst at CMC Markets.
Investors were also wary ahead of a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping.
Topping the agenda will be whether Trump makes good on his threat to use U.S.-China trade ties to pressure Beijing to do more to rein in its nuclear-armed neighbour North Korea.
The gold index finished 1.1 percent higher as investors took shelter in safe-haven assets amid the depressed global backdrop.
Newcrest Mining Ltd rose 0.9 percent.
New Zealand’s benchmark S&P/NZX 50 index ended 0.34 percent, or 24.47 points, higher at 7,289.52.
The benchmark hit an intraday high of 7,289.53, the highest since October 2016.
Utilities and consumer stocks led the gains, with a2 Milk Company Ltd rising 3.3 percent, while Meridian Energy Ltd climbed 1.7 percent. (Reporting by Krishna V Kurup in Bengaluru; Editing by Shri Navaratnam)