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Banks and materials stocks led the Australian stock market to its biggest one-day drop in six weeks, while the currency continued to slide during European trading.

Having just hit a two-year high on Monday, the S&P/ASX 200 closed 1 per cent lower on Wednesday, its biggest fall since March 22.

A number of local analysts have cooled on the domestic banks, which are in the midst of their interim reporting season. Richard Coppleson, a veteran stockbroker at Bell Potter, said in his well-known afternoon report the banks “look tired and need a period of consolidation” having rallied by 25 per cent since early September.

“The banks perform poorly from May on for a few months and the ANZ result was not good enough to get everyone bullishly piling into the banks,” he wrote.

Shares in ANZ Banking Group were down 2.8 per cent, followed by a 2.7 per cent drop for National Australia Bank, Westpac down 1.9 per cent and Commonwealth Bank off 1.7 per cent.

The Australian dollar was down 0.7 per cent at $0.7487 in European trading, making it the worst-performing global currency today by some margin. The currency gained a cumulative 1 per cent over the previous three sessions, capped off by a more upbeat tone from the Reserve Bank of Australia as it kept interest rates on hold at its policy meeting on Tuesday.

Copyright The Financial Times Limited 2017. All rights reserved.
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