(Reuters) - Australian shares fell on Tuesday as investors viewed a U.S. move to level criminal charges against China's Huawei as potentially reducing the chance of Washington and Beijing reaching a durable resolution to their trade war.
The S&P/ASX 200 index dropped 0.5 percent or 31.40 points to 5,874.20 at the close, pulling back from a 0.7 percent gain on Friday. Markets were shut on Monday for Australia Day.
The United States on Monday announced criminal charges against China's Huawei Technologies Co Ltd, escalating a fight with the world's biggest telecommunications equipment maker. The indictment came as Chinese delegates were already in Washington to prepare for the latest round of trade talks.
Investor sentiment was already shaken after industrial bellweather Caterpillar and chipmaker Nvidia Corp flagged a weaker Chinese demand, igniting fresh fears of a slowdown in Australia's biggest trade partner China.
The financial sector slipped 1.7 percent to a near three-week low and was the biggest drag on the benchmark.
The country's "Big four" banks shed between 1.6 percent to 2.3 percent each.
Healthcare stocks also piled pressure on the main index, slumping 2.5 percent, with CSL Ltd declining 2.3 percent, and Australia-listed shares of medical devices maker ResMed Inc plunging 10.4 percent.
Still, sustained strength in Chinese iron ore futures helped to contain broad market losses, pushing the metals and mining index 2.3 percent higher to a near four-month high.
The world's biggest miner BHP Group gained 2.1 percent while rival Rio Tinto rose 3.8 percent.
Teleco Telstra Corp Ltd led gains on the benchmark, rallying 7.8 percent, after competitor TPG Telecom cancelled plans for a Huawei driven rival mobile network.
Across the Tasman sea, New Zealand's benchmark S&P/NZX 50 index closed 1.2 percent lower or 108.140 points to finish the session at 9,006.380.
Billing services provider Gentrack group declined 5.2 percent and was the top percentage loser.
(Reporting by Anushka Trivedi in Bengaluru; Editing by Shri Navaratnam)
