Aussie steadies as oil-fuelled risk rally offsets weak domestic surveys

SYDNEY, Nov 10 (Reuters) - The Australian and New Zealand dollars held on to gains on Tuesday as a plunge in oil prices fuelled a rally in risk assets, although a string of weak survey results painted a bleak outlook of the Australian economy.

The Aussie eased 0.1% to $0.6916 after rallying 1% overnight to as high as $0.6931. The rebound helped recoup part of last week's 2.5% slide, with support now seen around the June low of $0.6867.

The kiwi dollar was steady at $0.5633 after jumping 1.6% overnight, more than recouping losses from last week. Resistance is seen around $0.5658.

The kiwi also drew support after election results showed Prime Minister Christopher Luxon's incumbent three-party coalition could govern with a majority of just two seats following a general election on Saturday.

The continuition of the status quo would preserve the central bank's sole mandate on inflation and point to a more restrained fiscal stance than under a Labour government, which has signalled a broader mandate that includes employment and higher spending to support growth.

In Australia, new surveys painted a grim outlook for the economy after five rate hikes this year. Consumer sentiment hit a four-year low in November, while business conditions remain stuck in negative territory, a level not seen in six years.

"It's no doubt that consumption will slow from here," said My Bui, an economist at AMP. "As a result, businesses will continue to struggle to raise prices."

"We think the weakening in consumer confidence, and especially business conditions, is also an early signal that the rate hikes are working."

The Reserve Bank of Australia has raised its interest rate to an 18-year high of 4.85%, yet inflation remains sticky. Core inflation was 3.6% in September, above the central bank's 2% to 3% target band.

Swaps imply an 82% probability that interest rates have peaked in Australia, with a quarter-point rate cut fully priced in by the end of 2027.

Bonds cheered the fall in oil prices. Australia's 10-year government bond yields fell 3 basis points to 4.993%, the lowest since late August.

New Zealand's 10-year government bond yields dropped 5 basis points to 4.738%, hitting their lowest point since late August.