Australia shares fall as investors worry over rising cases, miners and banks weigh

Australian shares ended lower on Tuesday as investors were concerned over the economic impact of rising COVID-19 cases even as lockdowns continue, with losses in miners and banks stocks further weighing on the benchmark index.

The S&P/ASX 200 index closed 0.94% lower at 7,511 points after falling as much as 1.2% during the session. The index closed at its lowest levels since August 4.

The growing anxiety over the Delta variant of COVID-19 infections continues as Sydney expects cases to "rise substantially" despite a prolonged lockdown, raising fears of a second recession.

Australia shares poised to open higher, NZ rises

Investor sentiment was also eclipsed by falling iron ore prices that hurt the local mining stocks.

ASX 300 metals and mining index slumped 1.4% led by Piedmont Lithium Inc, down 8.7%, followed by Lynas Rare Earths Ltd, losing 7.9%.

The top miners fell between 1.3% and 1.8%.

Financial stocks were the biggest drag on the index, losing 1.7%. Magellan Financial Group Ltd, down 10.2%, led losses, followed by Zip Co Ltd, losing 3.78%.

The big four banks dropped between 1% and 3.5%.

Energy stocks slipped 1.3%, with Beach Energy closing 5.1% lower followed by Woodside, slipping 2.1%.

New Zealand's benchmark S&P/NZX 50 index fell 0.7% at close to 12,635.32 points as investors await the central bank's monetary policy statement on Wednesday.

"The only potential blot on New Zealand's now overheating economy would be the arrival, Australian-style, of the delta variant in the community there. It shouldn't be enough to sway the RBNZ from announcing a 0.25% rate hike tomorrow," Jeffrey Halley, market analyst at OANDA, wrote in a note.