March 20, 2020 / 2:59 AM / 14 days ago

Australian shares seek footing after rout on hopes of more stimulus salve

* Aussie benchmark set to drop more than 10% for second week

* Global economy already in recession on virus hit - Reuters Poll

* Air New Zealand plunges 40.3%

By Pranav A K

March 20 (Reuters) - Australian shares rose on Friday after a 10% slump over the past two sessions as the government signalled a second round of stimulus spending, furthering a worldwide effort to fight the coronavirus pandemic that has stalled global growth.

As of 0112 GMT, the S&P/ASX 200 index rose 146.8 points, or 3.1%, to 4,935. The benchmark, however, was set to drop more than 10% for a second straight week.

The big banks powered most of the benchmark’s gains, with Westpac Banking Corp and National Australia Bank adding more than 9% each, while Commonwealth Bank of Australia gained 5%.

Australian banks said they will defer loan repayments for small businesses impacted by coronavirus for six months.

The government is likely to unveil a second stimulus package within days, sources familiar with the plan told Reuters, and while its size is yet to be determined, Australian media reported it could be worth around 3%-4% of Australia’s A$2 trillion economy.

On Thursday, the Reserve Bank of Australia slashed interest rates further and embarked on a quantitative easing programme for the first time.

“Further fiscal stimulus will improve impact, but a downturn won’t be avoided,” analysts at Morgan Stanley wrote in a note.

A Reuters poll showed economists believe the global economy is already in a recession as the hit to activity from the coronavirus pandemic has become more widespread.

A rebound in oil prices on the day helped lift energy stocks , which have been battered this month following an oil price war between Russia and Saudi Arabia.

Oil Search and Santos Ltd climbed more than 8% each.

In New Zealand, the benchmark S&P/NZX 50 index dipped 0.2% to 9,097.17, and was set for its second consecutive week of sharp losses.

Flag carrier Air New Zealand sunk as much as 40.3%, suffering its worst intraday session in more than 18 years. This was despite New Zealand authorities announcing a $514 million lifeline for the airline.

Helping offset the losses was a 11.8% rise in Synlait Milk and a2 Milk Company’s 5.6% gain. (Reporting by A K Pranav in Bengaluru; Editing by Devika Syamnath)

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