July 7 (Reuters) - Australian shares fell on Friday, dragged by losses in financials and miners, after U.S. data indicating a better-than-expected private payrolls report reignited expectations the Federal Reserve will keep interest rates higher for longer.
The S&P/ASX 200 index slipped as much as 0.7% to 7,110.9 points by 0005 GMT, its worst session in two weeks. The benchmark has dropped over 1.1% so far this week, reversing from a 1.5% gain last week.
Paladin Energy and Pinnacle Investment Management were the top laggards on the broader index, with each falling above 5%.
Market participants exercised caution over worries a continued above-target inflation outlook and a stronger-than-expected labour market in the U.S. will lead to further monetary policy tightening by the Fed.
In Australia, heavyweight financial stocks retreated as much as 1.8%, falling most in value since June 23. All of the so-called "big four" banks lost between 1% and 2%.
The sub-index is set to mark its third consecutive day of losses and has lost over 2% in value so far this week.
Domestic miners followed suit to give up 2.5%, their lowest level since June 2, after iron ore prices fell overnight amid worries about steel production curbs in China.
Mining Trio mining trio BHP, Rio Tinto and Fortescue Metals retreating between 1.5% and 2.0%.
Across the Tasman Sea, New Zealand's S&P/NZX 50 index down as much as 1% at 11841.73 points. The benchmark has marked its worst session in over four weeks, losing over 0.5% through the week.
The Reserve Bank of New Zealand (RBNZ) will likely keep interest rates unchanged at 5.50% when it meets next week and for the rest of the year, a Reuters poll found.
Shares in Precinct Properties New Zealand slipped as much as 3.1% after the company revealed a draft revaluation loss on its property portfolio of about NZ$250 million ($153.85 million). ($1 = 1.6250 New Zealand dollars) (Reporting by Roushni Nair in Bengaluru; Editing by Krishna Chandra Eluri)
