Australian shares waver, Woolworths gains

SYDNEY (MarketWatch) -- Australian shares moved between small gains and losses on Tuesday, with an advance for Woolworths helping to offset some weakness in the banking sector.

The benchmark S&P/ASX 200 index AU:XJO � traded up 0.1% at 4.274.70. The Australian dollar AUDUSD �reached $1.0582 in Asian trading hours.

Click to Play Stocks end lower but pare steep losses

Stocks pared losses Monday afternoon but still finished the day in the red, as investors focused on the standoff between Greece and its private creditors and a surge in Portugal's borrowing costs.

Woolworths Ltd. AU:WOW �WOLWF �shares rose 1.8% after the supermarket giant said its first-half sales rose 5% compared to a year ago, to a total of 29.73 billion Australian dollars.

However, financials were weak, with Commonwealth Bank of Australia AU:CBA �CBAUF �down 0.4%.

Late Monday, ratings agency Fitch placed the credit ratings of Australia�s big four banks on ratings watch negative.

European shares and the Dow Jones Industrial Average closed lower on Monday, after a spike in Portuguese borrowing costs to a euro-era record highlighted investor concerns Europe�s debt crisis will continue to spread.

Investors pushed Portuguese bond yields higher by more than 1.5 percentage points to around 15.2% overnight, according to data from trading platform Tradeweb.

Portuguese bond yields started to climb earlier this month following the country�s downgrade to junk status by Standard & Poor�s and as talks continue between Greece and its private-sector bond holders.

Although there have been strong declarations from European Union officials that Greece�s situation is unique �investors will likely not feel reassured and investment in peripheral bond markets will likely remain hampered for some time. The price of Portuguese government bonds, in particular, reflects these fears,� said European economists at Credit Suisse.

European Union leaders met yesterday and European Union Council president Herman Van Rompuy said in a statement after the meeting that 25 out of 27 member states approved a fiscal compact for the region which he described as a �treaty on stability and convergence�.

An agreement for a permanent debt firewall, the European Stability Mechanism, was also endorsed at the meeting.

�[This] will prevent contagion in the euro area and further restore confidence,� Van Rompuy said after the leaders meeting.