Australia, Nz Dollars Extend Losing Streak as Mideast War Hits Global Growth

SYDNEY, March 30 (Reuters) - The Australian and New Zealand dollars hit multi-month lows on Monday as surging energy costs from a protracted Middle East war darkened the outlook for global growth, sending investors to hide in the safety of the U.S. dollar.

The Aussie slipped 0.3% to $0.6851 AUD=D3, down for a seventh straight session to hit the lowest level since January 23. With the break of chart support at $0.6897, it now risks a retreat to $0.6700, well below the recent top of $0.7187.

Higher Australian interest rates have been a support for the currency, but that edge is fading as markets price in rate hikes elsewhere. The currency ended last week 2.1% lower, the worst weekly performance since April when President Donald Trump's "Liberation Day" tariffs spooked investors.

The kiwi dollar fell 0.3% at $0.5734 NZD=D3, down for a fifth straight session to hit the weakest level since January 15. Having lost 1.4% last week, key support is around $0.5712.

"The benefit to AUD/USD from the reassessment higher of the Reserve Bank of Australia’s cash rate has peaked in our view," said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.

"AUD/USD falls, often sharply, when market participants downgrade the global economic outlook."

Pakistan said on Sunday it was preparing to host "meaningful talks" to end the conflict even though Tehran earlier accused Washington of preparing a land assault, which could sharply escalate the war that is already in its fifth week. Yemen's Iran-aligned Houthis also launched their first attacks on Israel since the start of the conflict. Brent crude futures LCOc1 rose 3% on Monday to $116 a barrel.

Down Under, the RBA will publish the minutes of its March meeting on Tuesday where policymakers hiked interest rates to 4.1% in a close 5-to-4 decision. Much attention will be on how board members balance the risks of inflation and economic growth as a fuel shortage gripped some parts of the country.

Analysts at HSBC now expect Australia's economy to contract in the second quarter after two rate hikes this year, and higher fuel prices to weaken consumer spending.

"Our base case has only one quarter of GDP declining, before growth returns, as oil prices decline," said Paul Bloxham, chief economist, Australia, NZ & Global commodities at HSBC.

"However, the longer the Middle East conflict continues, the higher oil prices are expected to stay and the more disruptive the shock is expected to be."

After summoning a national cabinet meeting, Prime Minister Anthony Albanese announced on Monday that the government would halve fuel excise on petrol and diesel for three months to bring down costs, equivalent to a reduction of 26.3 cents per litre.

The states of Victoria and Tasmania have announced free travel on public transport to help incentivise people not to drive as fuel prices soared.