Australian shares fell more than 2% on Monday in their worst session in nearly seven months, as weak commodity prices hammered mining and energy stocks, while AusNet Services soared after receiving a sweetened buyout offer.

The S&P/ASX 200 index closed 2.1% lower at 7,248.2, marking its steepest drop since Feb. 26.

Commodity prices were weighed down by a stronger US dollar, which rallied to a month high as looming catastrophe at indebted property giant China Evergrande added extra nerves to a cautious mood.

"A lot of the Evergrande debt issuance are in US dollars and that's making a strong argument to hold the dollar right now," said Brad Smoling, managing director at Smoling Stockbroking.

Heavyweight miners fell more than 4% to lead the decline on the benchmark index, pressured by a slump in Chinese iron ore futures.

Global miner Rio Tinto Ltd extended losses into a fourth session, while rival BHP Group Ltd tumbled to a 10-month low.

Gold stocks tracked bullion prices lower and hit multi-month troughs, with Australia's biggest gold miner Newcrest Mining shedding 1.8%.Energy stocks dropped 3% in their worst session in more than a month.

Property stocks also fell, with Lendlease Group and Goodman Group shedding 3.5% and 2.5%, respectively.

"Evergrande is one of the major property owners in Australia... They will be forced to liquidate large amounts of property to fulfil their debt obligations and that will really hurt property and property-related stocks," Smoling said.

Shares of AusNet Services soared to a record close as the company said it had opened its books to an affiliate of Canadian infrastructure investor Brookfield Asset Management after receiving a higher non-binding buyout proposal of A$9.57 billion ($6.95 billion).

New Zealand's benchmark S&P/NZX 50 index closed 0.4% lower at 13,178.58.