* Investors cheer as BHP hits record iron ore output
* Materials take BHP’s lead
* Energy and gold indexes extend losses
By Nikhil Nainan
July 18 (Reuters) - Australian shares gained on Wednesday after index heavyweight BHP reported record annual iron ore output, sending its shares more than 3 percent higher.
The S&P/ASX 200 index rose 0.8 percent, or 47.2 points to 6,250.8 by 0200 GMT. The benchmark dropped 0.6 percent on Tuesday.
Global miner BHP said its iron ore production in the three months through June rose 3 percent to 72 million tonnes, and has set a bigger target for fiscal 2019.
“It think the majority of the gains that we are seeing is because BHP is performing well and that is bleeding out into the rest of the materials sector,” said Christopher Conway, head of research and trading at Australian Stock Report.
The news sent BHP’s shares up as much as 3.6 percent, their biggest intra-day percentage gain in more than four months, pulling up the mining index by 1.8 percent.
Even an expected $650 million charge to fiscal 2018 results to cover the failure of the Samarco Dam in Brazil did not dampen investor sentiment.
“Everyone knew there was a charge coming; that was probably towards the lower end of the worst-case scenario. I think the hit they have taken is at the lesser end of the scale,” Conway said.
Financials were the second biggest boost to the index, with Commonwealth Bank of Australia up 0.8 percent.
Meanwhile, gold and energy stocks extended losses on Wednesday on the back of a stronger U.S. dollar and falling oil prices.
The energy index, was down 0.6 percent and on track for a sixth straight session of losses as Oil Search extended losses after posting a sharp decline in first-half revenue on Tuesday.
Oil prices dropped again, after an industry group reported that U.S. crude inventories rose last week, defying analysts’ expectations of a significant reduction.
Similarly, gold prices dropped more than 1 percent overnight after upbeat testimony to Congress from Federal Reserve Chairman Jerome Powell on the U.S. economy. Gold recovered slightly in early Asian trade.
Concerns that the Fed will stick to its plan of two further rate hikes this year will likely make gold more expensive to own since bullion does not earn any interest or dividends, and costs money to store and insure.
New Zealand’s benchmark S&P/NZX 50 index fell 0.2 percent, or 18.8 points to 8,960.3.
Energy and consumer stocks led the declines, with Z Energy down 2.7 percent after cutting its 2019 EBITDAF forecast for earnings before interest, tax, depreciation, amortisation and fair value adjustments.
For more individual stocks activity click on (Reporting by Nikhil Kurian Nainan in Bengaluru; additional reporting by Mensholong Lepcha Editing by Eric Meijer)