News: XMM Australian shares slip as heavyweight financials drag

	  ASX snaps three-day winning streak 

	  Banking stocks post worst day in over a week 

	  Investors await Fed meeting minutes  

(Updates to close)

Australian shares ended lower on Wednesday, dragged by heavyweight banking stocks, a day after the country's central bank reiterated that interest rates have to remain higher for longer to curb inflation, even as it held rates steady.

The S&P/ASX 200 index (xjo) closed 0.4% lower at 7,253.20, after rising 0.5% on Tuesday.

The Reserve Bank of Australia (RBA) held its interest rates steady at an 11-year high of 4.10% on Tuesday, saying it wanted more time to assess the impact of past hikes.

But Governor Philip Lowe repeated previous warnings that some further tightening of monetary policy might be required as "inflation is still too high and will remain so for some time yet."

"I think yesterday we got a little bit of a relief rally and today we have a little bit of reality bites in terms of interest rates," said Henry Jennings, senior analyst and portfolio manager at Marcustoday Financial Newsletter.

"Even if they (RBA) don't raise rates again, the higher for longer narrative continues, and the market just got a little bit carried away with itself yesterday with the optimism on the rate pause."

Meanwhile, data showed that services sector in Australia's top trade partner China expanded at the softest pace in five months in June, adding to evidence that the economic recovery is losing steam and dampening risk sentiment.

Heavyweight financial stocks were biggest laggards in the benchmark index, falling 0.6%, their worst day since June 23. All of the so-called "big four" banks traded in the red.

Energy stocks .AXEJ lost 0.6% after oil prices retreated on concerns over a global economic slowdown.

Mining stocks .AXMM fell 0.1%. Iron ore futures slipped as traders gauged China's demand prospects.

Investors are also awaiting the minutes of the U.S. Federal Reserve's June policy meeting, due at 1800 GMT.

In New Zealand, the benchmark S&P/NZX 50 index (nz50) advanced 0.2% to 12,002.46.