News: FMG Australian shares fall as investors cautious ahead of China rate decision

Aug 21 (Reuters) - Australian shares dropped on Monday, led by financials and technology sub-indexes, as investors stayed on the sidelines to gauge the U.S. Federal Reserve's outlook for interest rates this week and also awaited more policy measures from Beijing.

The S&P/ASX 200 index (xjo) was down 0.2% at 7,130.3 points by 0105 GMT.

Global investors are bracing for a lending rate cut in China, Australia's largest trading partner, with most of them already disappointed with the stimulus measures announced to prop up its beleaguered economy.

Traders are also looking out for further trajectory in rate hikes from the U.S. Fed at the Jackson Hole conference later this week.

Back in the region, the Australian finance sector .AXFJ was the top laggard in the benchmark index, losing about 0.6%. Three of the four biggest banks traded down between 0.2% and 0.9%.

Shares of Westpac (WBC) slipped more than 2% to a near six-week low after the country's third-biggest lender flagged higher expenses during its third quarter.

The mining index .AXMM fell about 0.2%, with the iron ore majors Rio Tinto (RIO) and BHP Group (BHP) down 0.6% and 0.3%.

BHP Group is set to announce its fiscal 2023 results on Tuesday.

The technology index .AXIJ tracked its U.S. peers' performance lower, slumping about 1%.

The gold .AXGD and healthcare .AXHJ indexes further weighed on the benchmark, tanking about 1.1% and 0.7%, respectively.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index (nz50) fell nearly 1% to 11,503.98 points.

Shares of A2 Milk (ATM) slumped as much as 12% after the dairy producer forecast weak revenue growth and challenges in China's infant milk formula market in fiscal year 2024.