Australian shares close lower as tech stocks weigh

By Nikita Maria Jino

June 26 (Reuters) - Australian shares closed lower on Thursday, dragged down by technology stocks, as software giant Xero fell after raising capital at a discount to fund the buyout of Melio Payments.

The S&P/ASX 200 index .AXJO closed 0.1% lower at 8,550.8 points. The benchmark ended flat on Wednesday.

Technology stocks .AXIJ slipped 2.1%, closing at its lowest in more than three weeks, led by a 5.3% decline in Xero XRO.AX. Shares of the accounting software maker resumed trading a day after it said it would acquire U.S.-Israeli payments provider Melio Payments for as much as $3 billion.

The company raised A$1.85 billion ($1.21 billion) at a 9.4% discounted price of A$176 per share to help fund the deal.

"While the deal will help bolster Xero's credentials as a global software player, questions remain about the price paid, the potential dilution of free cash flow margin and how the loss-making company will be integrated into Xero's business," said Tony Sycamore, market analyst at IG.

Larger peer WiseTech Global WTC.AX fell 0.6%.

The industrial sub-index .AXNJ fell 0.4% and real estate stocks .AXRE lost 0.7%.

Heavyweight financial stocks .AXFJ ended flat after scaling fresh record highs for three consecutive sessions. Top lender Commonwealth Bank of Australia CBA.AX closed down 0.4%.

Sycamore said that the financial sector is overbought and there is potentially a little bit of cooling.

Miners .AXMM ended up 0.1% as copper prices hit a two-week high, while healthcare stocks .AXHJ rose 0.4%.

Local investors are now awaiting May retail sales data due next week.

There are concerns around Australia's growth trajectory and the retail sales data may reinforce the case for a rate cut in July and a potential follow-up cut in August, Sycamore said.

New Zealand's benchmark S&P/NZX 50 index .NZ50 snapped a six-day losing run to finish 0.2% higher at 12,480.05 points.

($1 = 1.5335 Australian dollars)

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