- Fortescue Metals slumped 6.4% to see its worst session in more than four months, while global miners Rio Tinto and BHP recorded significant losses.
Australian shares closed lower on Wednesday, dragged lower by losses in the resources sector, while a record-low underlying inflation in the last quarter signalled a possible retention of the accommodative policy stance by the country's central bank.
The S&P/ASX 200 index closed 0.7% lower at 6,780.6, pulling back from a 11-month high scaled on Monday. Markets were closed on Tuesday for a local holiday.
Data showed underlying inflation in Australia stayed at 1.2% in the December quarter, which analysts took as a green light for the Reserve Bank of Australia (RBA) to keep policy super easy.
"Underlying inflation is still far from target and to eventually get it there, the unemployment rate will need to be considerably lower and wage growth much higher," analysts at ANZ wrote, adding that the figure suggested the RBA would continue with a very accommodative policy stance.
"As such, we look for the RBA to extend its quantitative easing program with an announcement possible as early as next week when the Board meets."
The US Federal Reserve's policy meeting is expected to wrap up later in the day which will be keenly watched by investors, with analysts expecting the Fed to stick to its dovish tone to help speed economic recovery.
Miners shed 3.4% after Chinese iron ore prices fell.
Fortescue Metals slumped 6.4% to see its worst session in more than four months, while global miners Rio Tinto and BHP recorded significant losses.
Gold stocks also took a hit on a fall in bullion prices, with Newcrest Mining losing 1%.
Energy stocks closed lower. Woodside Petroleum Ltd and Santos Ltd dropped 2.9% and 4.3%, respectively.
New Zealand's benchmark S&P/NZX 50 index closed 0.4% higher to settle at 13,374. A2 Milk was the top gainer in the index.