Australian shares end flat as higher oil prices, rising yields weigh

By Aamir Khalid

Sept 14 (Reuters) - Australian shares ended flat on Monday as gains in banks and energy stocks offset losses in miners, while investors remained cautious amid soaring oil prices, rising bond yields and escalating tensions in the Middle East.

The benchmark S&P/ASX 200 index .AXJO ended up 0.1% at 8,749.90 points, snapping a four-day losing streak. The benchmark fell nearly 3% last week.

Investor sentiment remained fragile as higher oil prices stoked inflation fears and rate hike concerns. Australian 10-year bond yields rose to a 15-year high on Friday, while uncertainty surrounding the Middle East conflict curbed risk appetite.

Markets are now pricing in more than an 80% chance of a Reserve Bank of Australia rate hike later this month, up from 76% on Friday. 0#AUDIRPR

"The ASX 200 is reflecting a cautious, wait-and-see mood," said Tim Waterer, chief market analyst at KCM Trade.

"A sharp rise in Australian 10-year bond yields raises the cost of capital and puts pressure on the rate-sensitive parts of the market, keeping risk appetite contained even as some sectors find buyers."

On the bourse, miners .AXMM slipped as much as 1.2%, their lowest level in over a month, weakened by falling iron ore prices. IRONORE/

Banks .AXFJ rose 0.4%. Most "Big Four" banks traded in the green, except for National Australia Bank NAB.AX, which finished flat.

Waterer said that banks found support as investors rotated into traditional, yield-oriented names, with the sub-index "benefiting from their relative defensive appeal."

Energy stocks .AXEJ followed suit, gaining 0.4%, on higher oil prices. O/R

Healthcare stocks .AXHJ jumped 1.5%, as investors rotated into defensive exposures amid elevated yields and softer global tech sentiment, Waterer said.

Tech stocks .AXIJ slipped 1.4%, hitting their lowest level since July 24 earlier in the session.

AI-related stocks fell on calls from industry leaders called for a slowdown in the development of advanced AI models.

Across the Tasman Sea, the New Zealand benchmark S&P/NZX 50 index .NZ50 fell 0.1% to 13,560.69 points.