Australian shares fell on Thursday, dragged down by mining and energy stocks on weak commodity prices, while the central bank's decision to skip buying a government bond prompted investors to begin pricing in a rate hike.

The S&P/ASX 200 index closed 0.3% lower at 7,430.4 with most sectors trading in the red. The benchmark ended flat on Tuesday.

The Reserve Bank of Australia (RBA) in an unexpected move didn't offer to buy the April 2024 bond, sending the yield soaring above its target and stoking market wagers that rates would be raised two years earlier than current forecast of 2024.

"The RBA's decision is disturbing as the yield on the two-year bonds doubled from 25 basis points to 50 basis points in a matter of minutes. They have certainly lost the yield curve," said Brad Smoling of Smoling Stockbroking.

Markets were expecting the RBA to buy the April 2024 bond in order to contain the recent blow out in yields, he added.

Miners were down 1.4%, extending losses to a second straight session, on weaker iron ore prices.

Two of the three mining giants - Rio Tinto and BHP Group - were down 1.5% and 1.7%, respectively.

Fortescue Metals Group was flat after the world's No.4 iron ore miner reported record quarterly shipments but received less price per tonne due to a major drop in commodity prices.

Energy shares fell 2% following a slump in oil prices, while China's decision to monitor surging coal prices dragged stocks on the subindex further.

Whitehaven Coal fell 5% to lead losses on the sub-index, while Woodside Petroleum lost 2.5%.

Bucking the trend, No. 2 electronics retailer JB Hi-Fi jumped 3.2% on seeing a rebound in sales as Australia gradually loosens COVID-19 restrictions.

In New Zealand, the benchmark S&P/NZX 50 index closed 0.4% lower at 12,970.99.