* ASX 200 set to snap 3-day winning streak
* Except for gold stocks, sectors run red
* Clinuvel Pharma surges as much as 51% on FDA treatment approval
By Ambar Warrick
Oct 9 (Reuters) - Australian shares fell on Wednesday as heightened tensions between the United States and China unnerved investors and clouded optimism over senior-level trade talks set to begin this week.
The S&P/ASX 200 index .AXJO fell 0.8% or 51.3 points to 6,542.10 by 0031 GMT. The benchmark rose 0.5% on Tuesday.
Wall Street indexes and European stocks dropped on Tuesday after Washington imposed visa restrictions on Chinese officials and widened its trade blacklist to include some of China's top artificial intelligence startups. MKTS/GLOB
Washington is also moving ahead with discussions around possible restrictions on capital flows into China, with a focus on investments made by U.S. government pension funds, Bloomberg reported.
The moves saw investors fearing retaliatory measures from Beijing, given that a volley of tariffs between the world's two largest economies has battered financial markets for more than a year.
"The timing couldn't be worse...there was some optimism that we might at least see a limited deal out of the meeting coming on Thursday night, (but) the potential for that appears to have slipped away," said Michael McCarthy, chief market strategist at CMC Markets.
Most sectors on the ASX 200 were in the red, with the heavyweight financial .AXFJ and mining .AXMM subindexes shedding about 1.1% and 0.8%, respectively.
The "Big Four" banks fell up to 1.3%, with Australia and New Zealand Banking Group ANZ.AX leading declines.
Shares of mining majors BHP Group BHP.AX and Rio Tinto (LON:RIO) RIO.AX dropped 1.3% and 1.5%, respectively.
"It's not just pressure on shares, we've seen drops in key industrial commodities, particularly crude oil and copper, and that's having a double impact on Australian trading today," CMC Markets' McCarthy added.
Information technology stocks .AXIJ were also lower, tracking broad declines on the Nasdaq .IXIC .
Gold stocks .AXGD rose 1.7% as safe-haven demand pushed up bullion prices. The gold stocks sector has gained nearly 40% this year, and is the best performer on the ASX 200.
Drugmaker Clinuvel Pharmaceuticals Ltd CUV.AX surged as much as 51% to a record high after the U.S. Food and Drug Administration approved the company's treatment for a rare skin disorder. The stock racked up the highest intra-day gain on the benchmark index. Zealand stocks fell amid broad-based declines, with the benchmark S&P/NZX 50 index .NZ50 down 0.5% or 60.64 points to 10,954.61.
Local listings of Westpac Banking Corp WBC.NZ and ANZ ANZ.NZ dropped around 1% each.