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ASX 200 drops 0.9% this week
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Aurizon Holdings top gainer on ASX 200
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Banks and miners lead losses
Dec 16 (Reuters) - Australian shares fell on Friday to post their second straight weekly decline, as a hawkish U.S. Federal Reserve and slowing economic activity in top trading partner China fuelled fears of a global recession.
The S&P/ASX 200 index closed 0.8% lower at 7,148.70 after a 0.6% drop on Thursday, with banks and miners leading the decline.
Fed Chair Jerome Powell said on Wednesday the U.S. central bank will deliver more interest rate hikes next year despite a possible recession in the United States, with rates expected to peak above 5%.
Data showing cooling inflation doesn't necessarily mean the central bank should slow down on rate hikes, said Azeem Sheriff, a market analyst at CMC Markets.
"We could potentially start to see a pivot in terms of positivity, the Santa rally could potentially come to an end," said Sheriff, forecasting a potential recession and consequent hit to corporate earnings next year.
After data showed worse-than-expected economic activity for November, China's top state planner said the economy needed "arduous efforts" to sustain the recovery in growth due to an adverse external environment and the global economy's loss of momentum.
In Australia, heavyweight financials fell 0.9%, leading losses on the bourse. The so-called "big four" banks fell between 0.8% and 1.3%.
Miners dropped 0.8%, even as Dalian iron ore futures hit a six-month high.
BHP Group and Fortescue Metals Group fell 0.6% and 1.4% respectively, while Rio Tinto jumped 0.8%.
Energy stocks advanced 0.4% as oil prices rose, with Woodside Energy and Santos up 0.3% and 0.1%, respectively.
Among individual stocks, Aurizon Holdings jumped as much as 4.3% after the country's largest rail freight operator said it would sell its East Coast Rail business to Magnetic Rail Group for A$425 million in cash.
New Zealand's benchmark S&P/NZX 50 index closed marginally higher at 11,603.66. ($1 = 1.4872 Australian dollars) (Reporting by Echha Jain in Bengaluru; Editing by Subhranshu Sahu)