* Tighter pollution norms in China’s Tangshan hits iron ore
* Fortescue slides 8.3% in worst session since Dec. 2
* RBA rebuffs talk of early rate hikes, says long way to go
* Financials clock biggest drop since Feb. 26 (Updates to close)
March 10 (Reuters) - Australian shares closed lower on Wednesday, as iron ore miners tumbled on tighter anti-pollution measures in China, while banking stocks slid after the central bank dismissed market expectations of early rate hikes.
The S&P/ASX 200 index ended 0.8% lower at 6,714.10, reversing the session’s gains of as much as 0.5%. The benchmark had risen 0.5% on Tuesday.
Mining stocks slipped after Chinese iron ore futures slumped to their lowest in four weeks, pummelled by stricter anti-pollution measures in China’s top steelmaking city of Tangshan.
Fortescue Metals Group, the world’s fourth-largest iron ore miner, was the biggest loser on the index, falling 8.3%. This was its biggest drop since Dec. 2.
The more diversified Rio Tinto lost 5.5% to hit a more than four-week low, while rival BHP Group declined 2.8%.
Australia’s central bank chief on Wednesday rebuffed market talk of rate hikes, saying it will take at least until 2024 to reach full employment and that there was still a long way to go for the economy to fully recover.
Markets had been increasingly pricing in rate hikes as early as late-next year, amid strong economic data and smooth vaccine rollouts. Bond markets have seen sharp sell-offs recently while equity markets remained nervous about support tapering off.
The financial sub-index, which had been rallying on expectations of margin recovery for banks, recorded their biggest drop since Feb. 26.
Commonwealth Bank of Australia and Westpac Banking Corp fell 1.3% each, while National Australia Bank shed 1.5%. The smaller Australia and New Zealand Banking Group lost 2%.
Energy stocks fell too after oil prices dropped. Index heavyweight Woodside Petroleum slipped 2.7%, Santos fell 3.8%, and Beach Energy declined 3.4%.
New Zealand’s benchmark S&P/NZX 50 index rose 0.9%, with Air New Zealand gaining the most with a 3.5% rise. (Reporting by Rashmi Ashok in Bengaluru; editing by Uttaresh.V)