Australian shares closed lower on Monday, with losses seen across major sub-indexes, as a surge in Delta variant cases in the country and other Asian nations raised concerns about economic recovery.

The S&P/ASX 200 index ended down 0.8% at 7,286 points, after falling as much as 1.4%.

Australian authorities said Victoria state will extend a COVID-19 lockdown beyond Tuesday, while other Asian countries also struggled to curb the virus, denting markets already worried about global growth and high inflation.

The metals and mining index, down 2.7%, was the biggest drag on the benchmark index. Weak iron ore prices weighed on the sector. Heavyweights BHP Group, Rio Tinto and Fortescue fell between 2.6% and 1.4%.

Australia shares close at lowest level in 2 weeks on lockdown extension fears

A 2.1% slip on the ASX 200 Energy index also pulled the markets lower. Oil prices stumbled more than 1% on OPEC+ group of producers agreeing to boost supply.

Oil Search Ltd, down 4.9%, was the biggest loser on the sub-index, followed by Santos Ltd that fell 2.4%.

The "Big Four" banks shed between 0.5% and 1.2%.

Health stocks, however, closed up 1.6% as a firm US dollar aided export-reliant stocks. Medical devices maker PolyNovo added 3.4% and ResMed climbed 2.4%.

Investors' focus is now on the Australian manufacturing data, which is due on Wednesday.

"Australian PMIs on Wednesday should remain strong, but with sweeping lockdowns in NSW and Melbourne, any signs of viral infection will not be kind to the AUD or local equities," Jeffrey Halley, senior market analyst at OANDA said in a note.

Amongst individual stocks, software maker Altium declined 3.8% after US peer Autodesk Inc ended takeover talks.

In New Zealand, the benchmark S&P/NZX 50 index ended down 0.2% at 12,652.09 points.