July 17, 2020 / 1:47 AM / 19 days ago

Australia shares inch lower on unemployment, virus worries; NZ recovers

* Rio Tinto hits near six-month high on strong Q2 shipments

* Australian mining sub-index set for best week since late May

* NZ June manufacturing moves to expansionary territory - survey

By Arundhati Dutta

July 17 (Reuters) - Australian shares eased on Friday as a rise in the country's jobless rate and surging coronavirus cases in Victoria weighed on sentiment, while Rio Tinto scaled a near six-month high after reporting strong quarterly iron ore shipments.

The S&P/ASX 200 index slipped 0.1% to 6,003.6 by 0111 GMT, but was set to post a weekly gain of 1.5%.

Australia's jobless rate hit a 22-year high of 7.4% even though employment surged by a record last month, as the jump in jobs growth was not enough to offset the increase in the number of people who went looking for work.

Weighing on investor sentiment further, 327 new COVID-19 cases were reported on Thursday, a surge that was almost entirely due to the state of Victoria.

Among sectors, the metals and mining sub-index gained up to 1%, and was on track for its best week since the week ended May 22.

Rio Tinto, the world's largest iron ore miner, climbed 2.4% to its highest since January after its second-quarter iron ore shipments beat consensus estimates.

The gold sub index slid 0.8% and was set to snap three straight weekly gains. The top loser was De Grey Mining Ltd, down 4.4%, while Alacer Gold Corp lost 3.8%.

The number of issues on the ASX that advanced were 556 while 437 declined as a 1.3-to-1 ratio favoured advancers. The most heavily traded shares by volume were Alumina, Fortescue Metals Group and South32.

Across the Tasman Sea in New Zealand, the benchmark S&P/NZX 50 index recovered from early losses to trade 0.7% higher by 1258 GMT.

A survey showed manufacturing activity moved back to expansionary territory in June after three months of contraction.

Dairy giant Fonterra raised the lower end of its farmgate milk price guidance range as demand increased in China, its top market.

$1 = 1.4325 Australian dollars Reporting by Arundhati Dutta in Bengaluru; Editing by Subhranshu Sahu

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