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Australia shares extend losses as miners and energy stocks weigh, Oil Search shines

* Miners and energy firms biggest losers on ASX 200

* Oil Search ends up 6.3% on rejecting Santos bid

* Healthcare stocks climb up to 1% (Updates to close)

July 20 (Reuters) - Australian shares pared back sharp losses made in morning trade but ended lower on Tuesday, as a steep drop in mining and energy stocks outweighed gains in tech and healthcare firms.

The S&P/ASX 200 index extended losses into the second day, closing down 0.5% at 7,252.2 points, well off its opening lows of 1.1%.

On Tuesday, South Australia also entered lockdown, the third Australian state to do so as the country battled the worst COVID-19 outbreak of this year.

This hurt the Australian dollar, which was 0.31% lower.

“The currency looks really weak. Potentially we’re going into stagflation, and the currency might get sold down a lot more,” Mathan Somasundaram, CEO of Deep Data Analytics said.

“Over the next couple of days, if the U.S. market sells off, which is likely as even the global growth is in downgrade mode, that will hit our economy,” he added.

The broader market weakness remained as other Asian stocks widened their losses, gripped by fears of a protracted economic recovery.

Aussie miners were among the biggest drags on the benchmark, slumping nearly 1.9% even as iron ore prices inched up.

The heavyweight miners Rio Tinto, BHP Group and Fortescue Metals lost between 0.9% and 2.4%.

Energy stocks slumped as oil prices dipped 7% overnight.

However, Oil Search was the sole gainer in the sector, rising 6.5% as it rejected a takeover bid from Santos . It also finished as the top gainer on ASX 200.

Australia healthcare stocks reversed losses to end 0.9% higher, with heavyweight CSL Ltd gaining 1.3%.

Additionally, a 0.4% rise in the tech stocks helped keep the losses on the benchmark in check.

In New Zealand, the benchmark S&P/NZX 50 index traded unchanged at 12,650.8 points.

The top percentage loser on the index was SkyCity Entertainment Group, down 3.6% on extending closure of its Adelaide casino operations. ($1 = 1.3650 Australian dollars) (Reporting by Savyata Mishra in Bengaluru; Editing by Shailesh Kuber)

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