Australian shares fell on Thursday, dragged down by a sell-off in tech shares, while the country's escalating tensions with China and fresh coronavirus curbs in Sydney also weighed on investor sentiment.

The S&P/ASX 200 index declined 0.5% to close at 7,061.70, after three straight sessions of gains.

Technology stocks fell 3.6%, mirroring overnight Nasdaq losses, after Treasury Secretary Janet Yellen suggested that interest rates might need to rise in an overheating economy.

Buy-now-pay-later firm Afterpay led tech losses, plunging 7%.

Aerial imagery tech firm Nearmap Ltd was the top percentage loser on the benchmark, plunging over 23.3% after it said a patent infringement complaint was filed in a US District Court over the company's roof-estimation technology.

"We have seen more declines in the tech space today because of what is going on in the US economy at the moment, with stocks like Afterpay, Xero and SEEK reacting the most," said Dale Raynes, associate director at CPS Capital.

In the latest setback for Sino-Australia relations, China "indefinitely" suspended all activity under a China-Australia Strategic Economic Dialogue.

"Both equities and the Australian dollar have fallen on this news, with Sino-Australia relations a definite sell on rallies," said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA.

Travel and leisure stocks, including Qantas Airways , slid as officials reinstate social-distancing measures across greater Sydney after the detection of a new locally transmitted COVID-19 case.

Financial stocks dropped 0.7%, with National Australia Bank sliding 3%, despite posting 95% surge in cash profit for the half year.

Miners, on the other hand, gained 0.9% boosted by strong copper and iron ore prices, with sector heavyweights BHP Group and Rio Tinto rising 2.1% and 1%, respectively.

New Zealand's benchmark S&P/NZX 50 index fell 0.8% to finish the session at 12,751.67.