* U.S. tariffs on Chinese goods expected at any time
* Financials likely to fall for 7th straight session
* Australia, NZ shares set for sharp weekly losses
By Nikhil Nainan
Sept 7 (Reuters) - Australian shares fell sharply on Friday, as the end of a consultation period on a proposed expansion of U.S. tariffs against Chinese goods sent investors running for cover and financial stocks continued their gloomy run.
The S&P/ASX 200 index dropped 0.7 percent, or 42.3 points to 6,118.1 by 0200 GMT, and is set for a seventh day of losses.
Nerves were already frayed with the public comment period for proposed tariffs on an additional $200 billion worth of Chinese imports ending at 0400 GMT, although the timing for implementation is still unclear.
China has warned it would retaliate if Washington implements any new measures.
Friday's slump is expected to see the ASX benchmark give up over 200 points and lose more than 3 percent this week, the most since early February.
Financial stocks are set to extend their losses to a seventh session, with a 0.4 percent fall on Friday coming after three of the so-called "Big Four" banks raised their mortgage rates.
"We have seen our banks move interest rates higher. That's what happens when the banking sector is not a cartel but all begin to move at the same time," said Mathan Somasundaram, a Blue Ocean Equities market portfolio strategist.
National Australia Bank, the only Big Four bank that has not raised rates, was 0.4 percent lower. Insurance players were in the red, with Suncorp Group down 1.5 percent.
Weak wage growth, higher bank funding costs, and damaging revelations of widespread bank wrongdoing in an inquiry into the financial sector is likely to mean less credit will be available - on top of rising mortgage rates.
"Housing prices are doomed. It's a tsunami coming at the property market," Somasundaram said.
Materials stocks have been the most sensitive to trade tensions, given the how hard the resource-exporting Australian economy is likely be hit by falling growth in China, its largest trading partner.
The materials sector index is set to fall more than 4 percent for the week, although it was flat on Friday.
Alumina Ltd fell as much as 6.7 percent as industrial action at Alcoa's Western Australian operations, part owned by Alumina, is set to continue after workers rejected a proposed workplace agreement.
Energy stocks tumbled the most, with Beach Energy and Santos leading the losses, down 4.3 percent and 2.5 percent, respectively.
New Zealand's benchmark S&P/NZX 50 index fell 0.4 percent to 9,066.95, and is set to lose 2.6 percent this week.
Index heavyweights a2 Milk Company and Air New Zealand dropped 2.8 percent and 1.9 percent.
For more individual stocks activity click on (Reporting by Nikhil Kurian Nainan in Bengaluru; editing by Eric Meijer)