Australia shares buck global rally as virus concerns deepen

(Updates to close)

June 23 (Reuters) - Banks led a drop in Australian shares on Wednesday as concerns deepened about a COVID-19 outbreak in the state of New South Wales that prompted border closures and curbs on gatherings.

The emergence of the latest coronavirus cluster in the most populous city of Sydney also overshadowed improved global sentiment after U.S. Federal Reserve chairman Jerome Powell vowed on Tuesday not to raise interest rates too quickly.

The S&P/ASX 200 index closed 0.6% lower at 7,298.5 points, after jumping the most in nearly four months in the previous session.

“The outbreak in Sydney, albeit small in global terms, has led to states closing their borders to New South Wales,” said Damian Rooney, an analyst at Argonaut.

“I am afraid we are a bit back to the dark old days.”

Sydney reported 16 new local COVID-19 cases on Wednesday, bringing a fresh cluster to 37 cases, according to a media report.

Benchmark heavyweight financials dropped 1.1%, with all of the so-called “Big Four” banks closing lower.

A tech-led rally on Wall Street overnight, however, spurred domestic peers 1.1% higher. Buy now, pay later giant Afterpay gained 3.2%, while artificial intelligence firm Appen added 3.3%.

Miners also advanced, drawing support from higher iron ore prices. Sector bellwethers Rio Tinto and BHP ended higher.

New Zealand’s benchmark S&P/NZX 50 ended up 0.4% at 12,586.49 points. (Reporting by Harish Sridharan in Bengaluru; Editing by Aditya Soni)