Australia shares close at lowest level in 2 weeks on lockdown extension fears

* Major banks weighed on ASX

* Gold miners capped some losses

* NZX 50 rose 0.2% (Updates to close)

July 1 (Reuters) - Australian shares closed at their lowest level in two weeks on Thursday, after a rise in locally acquired COVID-19 cases in the country’s most populous state, New South Wales, spurred fears of an extended lockdown.

The S&P/ASX 200 index fell 0.65% to 7,265.6 points, closing at its lowest level in more than two weeks, with only gold miners making significant gains.

New South Wales on Thursday reported 24 locally acquired COVID-19 cases as the state capital Sydney nears a week of a hard lockdown put in place to contain an outbreak of the highly infectious Delta variant.

“The market sentiment has reversed into the new fiscal year with losses accelerating due to the new coronavirus cases in New South Wales,” said Brad Smoling, managing director at Smoling Stockbroking.

“Until there is some assurance that we are on top of the situation and the virus curbs can be lifted, the market sell-off will keep gathering steam and we can see that happening with major banks today.”

The heavyweight financial index was the top percentage loser on the bourse, with Australia’s biggest lender Commonwealth Bank of Australia sinking up to 1.3%.

Westpac, National Australia Bank as well as Australia and New Zealand Banking Group fell less than 1%.

Energy stocks closed 0.4% lower, as heavyweights, Santos and Origin Energy and Woodside Petroleum fell about 1% each.

Online property conveyancer PEXA Group fell as much as 4.3% minutes after its market debut. Shares of the group opened at A$17, below their initial public offering price of A$17.13.

In contrast, gold stocks gained the most among sectors, up 2.6%, benefiting from firmer bullion prices.

Gold miners Geopacific Resources Ltd and Tietto Minerals Ltd led gains, advancing 10% and 12.2%, respectively.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index rose 0.2% to 12683.6.

Reporting by Riya Sharma in Bengaluru; Editing by Amy Caren Daniel