Australian shares end lower on mining losses, see biggest weekly loss since late-Oct

* ASX200 clocks biggest weekly drop since Oct. 30, 2020

* Mining index posts worst week since March on soft ironore prices

* Retail-trading frenzy unlikely to last - broker (Updates to close)

Jan 29 (Reuters) - Australian shares closed lower on Friday, dragged by mining stocks after Chinese iron ore futures slid, with the benchmark index posting its sharpest weekly loss since late-October.

The S&P/ASX 200 index reversed early gains to end 0.6% lower at 6,607.4 and post a weekly loss of 2.8%. Markets on Friday tracked a drop in U.S. futures and broader Asian equities.

Asian markets were spooked that a coordinated assault by small traders organising over online forums to force U.S. hedge-funds to reverse short positions - which has led to sharp volatility in some stocks - could spill over into other markets.

Other brokers, however, said the situation was unlikely to play out on such a scale again.

“I think the Gamestop situation is a one-off in the larger scheme of things. We have got an extra-ordinary market situations driving this and that will be rectified. You’d imagine that the hedge-funds will cover their shorts,” said James McGlew, executive director of corporate stockbroking at Argonaut.

Miners closed 1.8% lower and clocked their worst week since March 13, 2020 with a 6.6% weekly drop. Demand worries dented Chinese iron ore futures in recent sessions after the commodity’s sharp rally towards the end of 2020.

Rio Tinto fell 3% and hit its lowest in nearly two months, while rival BHP dropped 1.6%. Both companies enjoyed sharp share gains last year, benefiting from soaring prices of the commodity.

Energy stocks fell 2.4%, with Woodside Petroleum and Santos shedding 2.7% and 3.1%, respectively.

The financial index shed 1.6%, with all “Big Four Banks” seeing losses. Australia and New Zealand Banking Group fell 2.1%, while National Australian Bank dropped 1.6%.

New Zealand’s benchmark S&P/NZX 50 index closed 0.3% higher at 13,127.29. Electronic payments platform Pushpay Holdings Ltd and movie software developer Vista Group were the top gainers.

Reporting by Harish Sridharan in Bengaluru