* Banks and materials the biggest drag
* Rally in health care and IT stocks keeps benchmark afloat
* Insurers lower as inquiry moves into insurance sector
* Health care stocks account for most of the losses in NZ
By Aditya Soni
Sept 10 (Reuters) - Australian shares were unchanged on Monday as losses in banks and materials, fuelled by a possible escalation in Sino-U.S. trade conflicts and increased likelihood of third rate hike by U.S. Federal Reserve were offset by a rally in health care and IT stocks.
The S&P/ASX 200 index .AXJO rose 1.70 points to 6,145.50 by 0200 GMT. The benchmark fell 0.3 percent on Friday and was on track to snap seven consecutive sessions of losses.
U.S. job growth accelerated in August and wages notched their largest annual increase in more than nine years, the U.S. Labor Department said on Friday, virtually securing a third interest rate increase from the Federal Reserve this year.
Michael McCarthy, chief market strategist at CMC Markets said the job numbers had prompted markets to price in increased probability of a rate hike in December, which was weighing on local trade.
Banks, which have the heaviest weighting on the benchmark, underpinned the bearish trend on Monday.
Index heavyweight Westpac Banking Corp WBC.AX fell 0.8 percent to a two-week low, while National Australia Bank Ltd NAB.AX dropped 0.5 percent.
NAB shares were trading at their lowest since August 27. Earlier in the day the lender said it will not lift its variable mortgage rate as it tries to win public support following revelations of misconduct, and despite its three larger rivals hiking their own rates. seeing financials stocks lower particularly ahead of the Royal Commission moving into the insurance sector over the course of this week, and insurers in particular are under pressure in early trading," said McCarthy.
Shares of QBE Insurance Group Ltd QBE.AX and Suncorp Group Ltd SUN.AX were trading 0.8 percent and 0.5 percent lower, respectively, as a powerful Australian inquiry turned to the A$46 billion ($32.70 billion) insurance sector. a near one-percent fall in benchmark copper on the London Metal Exchange CMCU3 hit materials stocks, with mining companies bearing the brunt of the losses.
BHP BHP.AX slipped 0.5 percent to a more than four-month low, while its rival Rio Tinto (LON:RIO) Ltd RIO.AX dropped 1.3 percent.
But healthcare stocks .AXHJ rose 0.8 percent, capping the losses on the benchmark. The healthcare index posted its biggest weekly fall in more then seven years last week.
Drugmaker CSL Ltd CSL.AX firmed 0.6 percent, while bionic-ear maker Cochlear Ltd COH.AX rose 0.5 percent.
Similarly, information technology stocks jumped 1.6 percent after recording a heavy drop last week.
Shares of Computershare Ltd CPU.AX rose 0.7 percent, while accounting software firm Xero Ltd XRO.AX surged 5 percent.
Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 slid 0.38 percent or 34.43 points to 9,060.96.
Health care stocks drove the fall, with Ryman Healthcare Ltd RYM.NZ down 1.5 percent, while Fisher & Paykel Healthcare Corporation Ltd FPH.NZ dropped 1 percent.
($1 = 1.4069 Australian dollars)