June 21 (Reuters) - Australian shares on Monday were set for their steepest fall in nearly five weeks, as they tracked a sell-off on Wall Street in the previous session on comments from a Federal Reserve official on sooner-than-expected rate hikes.

The S&P/ASX 200 index lost 1.6% to 7,245.8 by 0114 GMT.

Elsewhere, Japan's Nikkei was down nearly 3% at 28110.28 and S&P 500 E-minis futures dipped 0.2%.

Wall Street's main indexes fell sharply on Friday after U.S. central bank official James Bullard said he saw rate increases beginning as early as next year to curb rising inflation, spooking investors already worried about higher rates by 2023.

In the domestic market, financials declined the most, shedding more than 3%. The so-called "Big Four" banks fell between 2.1% and 4.4%.

Commonwealth Bank of Australia, the country's largest lender, fell the most and its shares were down as much as 4.4%.

CBA said it would sell its Australian general insurance business to South Africa's biggest privately-owned insurer Hollard Group for an upfront cash consideration of A$625 million, making a post-tax gain of A$90 million.

Gold stocks lost nearly 2%, with sector heavyweight Newcrest Mining dipping 1.3%.

Energy stocks were down 1.8%, with Viva Energy slipping 1.1%.

Miners dropped 1.7%, with mining giants BHP Group and Rio Tinto falling 1.2% and 1.8%, respectively.

Among the few gainers, Boral Ltd was the biggest gainer on the benchmark, up 2.4%, on divesting its North American building products business to Westlake Chemical Corp for $2.15 billion.

New Zealand's benchmark S&P/NZX 50 index was roughly flat at 12,533.16.

Power company Mercury NZ Ltd said it would buy electricity generator Trustpower Ltd's gas, telecommunications and retail electricity supply business for NZ$441 million ($305.8 million).

Mercury's shares were among the top gainers, up as much as 3.1%.

(Reporting by Vasudha Kaukuntla in Bengaluru; editing by Uttaresh.V)