* Weak U.S. data reverses gains from Tuesday rate cut
* NAB leads bank losses after it doubles remediation charge
* Gold stocks eke out gains
* Big Four banks fail to pass on full interest rate cuts (Updates to close)
By Nikhil Nainan
Oct 2 (Reuters) - Australian shares closed at their lowest level in nearly three weeks on Wednesday after poor U.S. manufacturing data sparked concerns about slowing global growth, triggering a broad selloff. Global markets took data showing U.S. manufacturing activity tumbling to more than decade lows as a sign that the world’s largest economy was feeling the impact of its trade war with China.
The news spurred a broad-based selloff and drove the S&P/ASX 200 index down 1.5%, or 102.9 points, to 6,639.9.
Just a day earlier, the benchmark had closed 0.8% higher after a late surge on the back of the Reserve Bank of Australia’s third interest rate cut this year and signals that it will ease further if needed.
All of the country’s ‘Big Four’ banks declined to pass on the full interest rate cut to customers due to growing worries of their impact on their ever-thinning margins.
Commonwealth Bank of Australia, Westpac Banking Corp and Australia and New Zealand Banking Group fell between 1.5% and 2.1%.
However, the country’s third largest lender, National Australia Bank, led the declines after it nearly doubled the funds it has set aside to repay customers for overcharged fees to A$2.09 billion ($1.40 billion).
NAB closed down 2.3% at its lowest level in three weeks.
With global data raising concerns about growth and the RBA leaving the door open for further easing, many analysts expect more rate cuts before the year is out.
But some are warning about the impact of super-easy monetary policy, with banks arguing that they are facing a difficult balancing act with rates approaching zero.
“The risks are probably going to outweigh what the central banks can do at the moment,” said Nick Twidale, a director & co-founder at Sydney-based trade finance provider Xchainge.
Some gold stocks managed to eke out gains, but most of the larger players closed lower.
After an initial surge overnight on safe haven buying, gold prices inched lower as investors booked profits.
Newcrest Mining edged down 0.1% lower, while Resolute Mining fell 1.1%.
Top miners BHP Group and Rio Tinto led losses among their peers, with demand worries dampening sentiment.
New Zealand’s benchmark S&P/NZX 50 index closed 0.4% lower at 10,951.64.
Local listings of Australia and New Zealand Banking Group and Westpac fell 2.2% and 1.5%, respectively. ($1 = 1.4908 Australian dollars) (Reporting by Nikhil Kurian Nainan in Bengaluru; editing by Richard Pullin)