(Adds details, comments, stocks on the move)
SYDNEY, Mar 1 (Reuters) - Australian shares fell 0.5 percent
in late morning trade on Friday, dragged by a sell-off in
cyclical stocks, as a key manufacturing report in China
indicated sluggish growth in the world's second largest economy.
China, Australia's biggest resources buyer, said on Friday
its official purchasing managers' index (PMI) was 50.1 for
February, missing market expectations for a reading of 50.2 as
overseas demand for Chinese goods remained tepid.
The weaker number just added to the market's woes, after
investors had shrugged off fears about political turmoil in
Markets based in Melbourne.
Top miner BHP Billiton Ltd fell 1.5 percent, while
5,078.9 as at 0118 GMT. The benchmark jumped 1.3 percent on
Thursday to its highest close since September 2008.
The market has rise over 9 percent this year, driven by
receding U.S. and euro zone debt concerns and a relatively
strong earnings season.
Investors were also wary about the U.S. budget cuts, which
are set to begin within hours, after the U.S. Senate on Thursday
defeated a Republican plan for replacing $85 billion in
across-the-board federal spending cuts.
"There is always supposed to be a threat more than anything
else, it seems to be coming into reality now," said Weston,
noting the spending cut would be a headwind for U.S. employment
Most big banks managed to hold the ground, led by a 1.3
percent gain in National Australia Bank Ltd. Australia
and New Zealand Banking Group dipped 0.1 percent.
Defensive stocks were weaker, with the country's flagship
telecom company Telstra Corp Ltd down 0.9 percent.
New Zealand's benchmark NZX 50 index fell 0.2
percent to 4,312.8.
STOCKS ON THE MOVE
* Television group Ten Network Holdings Ltd jumped
4.6 percent to A$0.35, after media reported rival Seven Group
Holdings Ltd 's boss Kerry Stokes had built up a A$40
million stake in it.
* Aurora Oil & Gas Ltd plunged 3.4 percent to
A$3.75, after it said it had made Eagle Ford shale acquisition
for A$117.5 million.
(Reporting by Maggie Lu Yueyang; Editing by Shri Navaratnam)