Australian shares end lower as banks slip on rate worries

Updates to close

By Keshav SinghChundawat

Dec 1 (Reuters) - Australian shares fell on Monday as heavyweight financials dragged the market lower, with valuation and margin worries mounting after recent economic data fuelled expectations that the central bank may have reached the end of its easing cycle.

The benchmark S&P/ASX 200 index .AXJO closed 0.6% lower at 8,565.20 points. It slid 3% in November, marking its steepest monthly decline in eight months.

Richly priced banks .AXFJ fell 0.9% to close at their lowest level in more than six months. Top lender Commonwealth Bank of Australia CBA.AX fell 0.6%, while the rest of the 'Big Four' banks lost between 0.6% and 1.3%.

"Financials are balancing on a knife edge," said Justin Lin, an investment analyst at Global X ETFs, explaining that demand for mortgages and bonds will decrease if interest rates are too high.

"Whether rates go up or down, there's not a scenario in which banks are the most attractive part of the market. Instead, materials are starting to catch up, and we might see a defensive rotation into consumer staples, industrials and energy," Lin said.

Hotter inflation and stronger jobs data last month sealed the case that the Reserve Bank of Australia's policy easing cycle may be over. Swaps currently imply a split chance of a rate hike by the end of next year. Traders are waiting for the quarterly gross domestic product report on Wednesday.

Investor sentiment was also hurt after stock exchange operator ASX's ASX.AX announcements platform suffered an outage, forcing about 80 stocks to be placed on a trading halt.

Healthcare stocks .AXHJ slipped 1.3% with biotech giant CSL CSL.AX down 1.4%.

Industrials .AXNJ and technology stocks .AXIJ fell 0.8% and 1.3%, respectively.

Among individual stocks, AUB Group AUB.AX dived 17.8% after its suitors EQT and CVC Asia Pacific abandoned their A$5.25 billion ($3.44 billion) pursuit of the company.

Bucking the trend, miners .AXMM and energy stocks .AXEJ rose 0.4% and 0.5%, respectively.

New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.3% to 13,448.49 points.

($1 = 1.5293 Australian dollars)

(Reporting by Keshav Singh Chundawat in Bengaluru; Editing by Nivedita Bhattacharjee)

((Keshav.SinghChundawat@thomsonreuters.com))