Australian shares closed lower on Wednesday, as iron ore miners tumbled on tighter anti-pollution measures in China, while banking stocks slid after the central bank dismissed market expectations of early rate hikes.

The S&P/ASX 200 index ended 0.8% lower at 6,714.10, reversing the session's gains of as much as 0.5%. The benchmark had risen 0.5% on Tuesday.

Mining stocks slipped after Chinese iron ore futures slumped to their lowest in four weeks, pummelled by stricter anti-pollution measures in China's top steelmaking city of Tangshan.Fortescue Metals Group, the world's fourth-largest iron ore miner, was the biggest loser on the index, falling 8.3%. This was its biggest drop since Dec. 2.

The more diversified Rio Tinto lost 5.5% to hit a more than four-week low, while rival BHP Group declined 2.8%.

Australia's central bank chief on Wednesday rebuffed market talk of rate hikes, saying it will take at least until 2024 to reach full employment and that there was still a long way to go for the economy to fully recover.

Markets had been increasingly pricing in rate hikes as early as late-next year, amid strong economic data and smooth vaccine rollouts. Bond markets have seen sharp sell-offs recently while equity markets remained nervous about support tapering off.

The financial sub-index, which had been rallying on expectations of margin recovery for banks, recorded their biggest drop since Feb. 26.

Commonwealth Bank of Australia and Westpac Banking Corp fell 1.3% each, while National Australia Bank shed 1.5%. The smaller Australia and New Zealand Banking Group lost 2%.

Energy stocks fell too after oil prices dropped. Index heavyweight Woodside Petroleum slipped 2.7%, Santos fell 3.8%, and Beach Energy declined 3.4%.

New Zealand's benchmark S&P/NZX 50 index rose 0.9%, with Air New Zealand gaining the most with a 3.5% rise.