Australian shares closed at their lowest level in two months on Thursday, as worries about the Omicron variant of the coronavirus persisted, while Afterpay led a broad sell-off in the technology sector.

The S&P/ASX 200 index ended 0.15% lower at 7,225.2, its weakest level since Oct. 6, after shedding nearly 1% during the session.

Australia's tally of people infected with the Omicron variant edged higher on Thursday, prompting state governments to bolster domestic border controls.

"The rest of December will likely see risk appetite take a cue from the gradual Omicron updates, supply chain issues, and inflation updates, and volatility will likely continue to dominate the market," Brad Smoling, managing director at Smoling Stockbroking said.

Technology stocks fell 3.19%, tracking the tech-heavy Nasdaq that dropped overnight on worries about COVID-19 after the first US case of the Omicron variant was confirmed, while it also digested Fed comments on inflation.

Buy-now-pay-later giant Afterpay skidded as much as 6.3% to hit a four-month low after postponing the shareholder meeting to vote on its $29 bln deal with Twitter co-founder Jack Dorsey led Square Inc.

Utilities and industrials sectors prevented the market from a steeper drop. Toll road operator Transurban Group jumped 2%, building materials provider Fletcher Building added 3.1%, and the country's top power producer AGL Energy advanced 4% - the most in two months.

Pharmacy chain Australian Pharmaceutical Industries climbed 18.1% to a more than three-year high after top Australian grocer Woolworths Group made a $613 million buyout proposal, besting an already-agreed buyout from retail giant Wesfarmers.

Wesfarmers and Woolworths both added 1.8% and 0.6%, respectively.

New Zealand's benchmark S&P/NZX 50 index fell 0.4% to finish the session at 12,670.2 points.