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Australia shares end lower on soft data, China tensions

* Second quarter sales and wages slip, signal recession

* China to investigate alleged subsidies to Aussie wine imports

* Huawei ends Australian rugby league team sponsorship (Updates to close)

Aug 31 (Reuters) - Australian shares finished lower on Monday as weak sales and wages data, coupled with growing diplomatic tensions with China, hit risk appetite despite a slowdown in coronavirus cases in Victoria.

Australian business reported a drop in second quarter sales and wages, overshadowing hopes that an end to the country’s lockdown may be in the offing after COVID-19 hotspot Victoria state said daily fresh cases fell to a near-two-month low.

The S&P/ASX 200 index fell 0.2% to 6,060.5 at the close of trade. The country is set to report its second quarter GDP figures on Wednesday and is widely expected to confirm its first recession in three decades.

“Some people are taking the economic data with a grain of salt and trying to look through the past into the future rather than focussing on what the data is,” said Henry Jennings, analyst at Marcustoday.

“But the data is not going to be good for sure, we’re going to be confirming the recession that we knew we were in.”

Meanwhile, biggest trading partner China launched an investigation into alleged government subsidies of some Australian wine imports, while telecom equipment firm Huawei scrapped a national rugby league team sponsorship amid escalating tensions between Beijing and Canberra.

The healthcare sub-index was the biggest drag on the benchmark, with industry heavyweight CSL losing 1.3% and ASX-listed shares of Resmed shedding 1.6%.

Energy stocks rose 2.1% as oil prices rose on global stimulus measures and surprisingly strong data from China’s services sector.

Earlier in the session, IOOF Holdings became the country’s top retail wealth manager after buying National Australia Bank Ltd’s financial advisory arm for $1.1 billion. Trading in IOOF’s shares was halted while NAB shares were little changed at the close of trade.

New Zealand’s benchmark S&P/NZX 50 index slid 1.3% to finish the session at 11,937.56 after data showed business sentiment in August declined compared to the previous month. (Reporting by Arpit Nayak in Bengaluru; Editing by Shailesh Kuber)

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