Australia shares fell 1.3% on Monday as COVID-19 cases in Sydney and the state of Victoria sparked worries of lockdown extension, while software firm Altium sank on reports that US peer Autodesk would abandon its $3.9 billion takeover bid.

The S&P/ASX 200 index was down 1.1% at 7,273.8 points, as of 0025 GMT, its lowest in a week.

It slipped as much as 1.3% to 7,253.20 earlier in the day.

Australian shares close at 2-week high on IT, health stocks boost

Sydney on Saturday ordered a shutdown of building sites, non-essential retail, among others, as new COVID-19 cases kept rising despite the city being three weeks into a lockdown, sparking worries of a hit to economic recovery.

"The shutdown of Greater Sydney construction is an added drag of at least another A$1 billion ($740.20 million) over two weeks," analysts at RBC Capital Markets said in a note.

"Even assuming some recovery later in the third quarter, GDP could be about 1.5% weaker in the quarter and would likely mean a negative third quarter (GDP)."

The top percentage losers on the benchmark were software-maker Altium, down 9.3%, followed by gold miner Evolution Mining and automotive retailer Eagers Automotive down 5.1% and 3.8%, respectively.

Altium's shares were paused less than 20 minutes of the market open after they fell as much as 14% to A$31.47 on reports that Autocad software maker Autodesk was walking away from its buyout proposal.

Miners were the biggest drags in the index, losing as much as 2.5%, with Sandfire Resources falling the most at 5.29%.

Heavyweight financials were down as much as 1.9%, with the "Big Four" banks trading in red. Energy stocks fell 1.57%, led by Worley, down 2.45%, and Oil Search losing 2.2%.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index slipped 0.31% to 12,634.6.

Top percentage losers on the benchmark were Fletcher Building, down 2.9%, followed by Kathmandu Holdings losing 2.7%, and Chorus down 2.1%.

Elsewhere, Japan's Nikkei was down 1.2%, while S&P 500 E-minis futures were down 0.3%.