Australian shares snap five-day rally after hot inflation data

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Australian CPI surges 1.9% in December quarter

NZ consumer inflation below cenbank forecast

Australian mining, tech stocks lead retreat

Updates to close

By Jaskiran Singh

Jan 25 (Reuters) -Australian shares snapped five consecutive sessions of gains on Wednesday, as hotter-than-expected inflation data cemented the case for more interest rate hikes from the central bank.

The S&P/ASX 200 index .AXJO ended 0.3% lower at 7,468.30 after Tuesday's 0.4% rise. Losses were however capped as heavyweight financials advanced.

Data showed the consumer price index surged 1.9% in the December quarter, outpacing market forecasts of 1.6%. For December, the CPI rose 8.4% compared to the same month a year ago, up from 7.3% in November. The annual rate climbed to 7.8%, from 7.3%, the highest since 1990.

"They (Reserve Bank of Australia) really have no choice but to re-pivot back to a tougher stance to ensure inflation expectations are grounded very quickly," said Carl Capolingua, a market analyst at ThinkMarkets Australia.

"As a result of today's inflation data, I would not be surprised to see if the market begins to factor in the slight possibility of a 50-basis point hike at the next RBA meeting on Feb. 7."

Analysts from National Australia Bank NAB.AX, ING and Citi broadly expect a 25-basis point hike next month.

Among sectors, mining .AXMM slipped 0.9%, with iron ore giants BHP Group BHP.AX, Rio Tinto RIO.AX and Fortescue Metals Group FMG.AX down between 0.2% and 1%.

Energy stocks .AXEJ dipped 1.2%, while gold stocks .AXGD slumped 2.3%. Shares of Woodside Energy Group WDS.AX fell 1.2%, even as the company posted an 81% jump in quarterly revenue on the back of strong gas prices.

Technology stocks .AXIJ fell 1.2%, with Xero Ltd XRO.AX and ASX-listed shares of Block Inc SQ2.AX down 2.7% and 2.8%, respectively.

Financials .AXFJ added 0.3%, with the so-called "big four" banks trading in positive territory.

"The hotter CPI data will still be seen as net positive for banks as it confirms rates are going to have to rise again," said Capolingua.

New Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.5% to 11,994.51. The country's December-quarter inflation came in below the central bank's forecast but held near a three-decade high.

Reporting by Jaskiran Singh in Bengaluru; Editing by Subhranshu Sahu

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