Australian shares drop on COVID-19 woes; RBA decision in focus

Australian stocks fell on Monday as surging COVID-19 cases in the country dampened sentiment ahead of the central bank's September policy meeting where it could announce a decision on the tapering of its pandemic-era asset purchases.

The benchmark ASX 200 index fell 1.1% to 7,442.6 by 0032 GMT.

Uncertainty over the Reserve Bank of Australia's (RBA) policy lingered, with analysts undecided on whether the RBA will put off its tapering plans on Tuesday.

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That piled on to the pressure already brought about by the country continuing its fight with raging COVID-19 infections, having reported 1,684 new cases on Sunday.

Among individual sectors and stocks, miners fell nearly 1%, with iron ore major Fortescue Metals dropping 10.8% to be the top loser on both the benchmark and the mining index.

The "Big Four" banks lost about 1% each, in line with the broader financials index that headed for its worst session in a week.

The energy index lost the most on the benchmark, shedding 2.2% on weaker oil prices.

Takeover target Oil Search gave Santos Ltd an extra week to complete due diligence for its proposed A$8.4 billion ($6.25 billion) buyout on Monday.

Bucking the trend, gold stocks rose 1.3% on strong bullion prices, with gold miners Northern Star Resources and Newcrest Mining gaining 1.5% and 1.8%, respectively.

In New Zealand, the benchmark NZX 50 index fell 0.3% to 13,245.22.

The top percentage losers on the main index were dairy firm A2 Milk Company Ltd, down 2.2%, followed by Serko Ltd , losing 1.9%.

Elsewhere, Japan's Nikkei was up 1.4%, while the S&P 500 E-minis futures were down 0.2%.