Australian shares closed at a six-week low on Wednesday, dragged down by losses in heavyweight bank and mining stocks, while EML Payments Ltd was the top loser on the benchmark index on fears of regulatory curbs on its Irish unit.

The benchmark ASX 200 index snapped a three-day rally to end 1.9% lower at 6,931.70, its lowest close since April 7.

"It's a widespread sell off, no sectors have been exempted from the selling, including those mining stocks that have had improvements in commodity prices," said Steven Daghlian, market analyst at CommSec.

"There are concerns in the US with significantly higher inflation...something to keep in mind is that we're coming off the back of three straight days of gains."

Payments services provider EML Payments tanked nearly 46%, after it said that its Ireland unit could face regulatory curbs.

Among sectors, gold stocks shed 2.8% despite bullion prices hitting a near four-month high.

St Barbara, down nearly 7%, was the top loser on the sub-index for a second session in a row after the miner cut its annual gold output forecast.

The financial sub-index closed down nearly 2%. The "Big Four" banks lost between 1.4% and 2.6%.

Miners dropped 3.3% to hit their lowest close in two weeks, with heavyweights Rio Tinto, BHP Group and Fortescue Metals losing between 3.2% to 3.9%.

Energy stocks slumped 2.8%, tracking a downturn in oil prices on demand concerns over rising COVID-19 cases in Asia.

Heavyweights Woodside Petroleum and Santos lost 2.6% and 2.2%, respectively.

In New Zealand, the benchmark NZX 50 index declined 1.2% to end at 12,281.5.

The focus is now on the release of the country's budget this week, which is expected to target spending on curbing issues of rising homelessness and inequality.