(Corrects second paragraph to say S&P/ASX 200 index closed nearly 1 percent up on Tuesday, not fell 0.5 percent)
* Australian shares down as materials offset financials' gains
* BHP shares down 0.8 percent after derailment
* Financial shares up on gains from 'Big Four' banks
By Aman Swami
Nov 7 (Reuters) - Australian shares were weaker in thin trade on Wednesday as investors awaited the outcome of U.S. midterm elections.
The S&P/ASX 200 index .AXJO fell 0.4 percent or 21.4 points to 5853.800 by 0100 GMT, with declines in commodity-related stocks outweighed by financial sector gains. The benchmark rose nearly 1 percent on Tuesday.
Election forecasters favour the Democratic Party to pick up the 23 seats they need for a majority in the House of representatives, but their chances of winning the Senate are slimmer, opinion polls show.
"We (Australian markets) are not expecting it to cause too much of an issue here unless there is a massive swing and both the houses there (U.S.) were to swing to the Democrats. That would cause some uncertainty," said James McGlew, executive director of corporate stockbroking at Argonaut.
The Australian financial sector index rose after heavyweight Commonwealth Bank CBA.AX shares rose despite posting a decline in first-quarter cash profit.
CBA noted that the outcome was 3 percent higher than average cash profits in the previous half, CBA said. Its 'Big Four' banking peers rose in a range of 0.5-1 percent.
"We have seen all major banks report results and we have been able to judge the impact of it on the bottom line. CBA was hit the hardest by the Royal Commission, having said that, most of them have come in line with expectations," McGlew added, referring to a quasi-judicial inquiry into financial misconduct.
However, gains in financials were outweighed by the materials stocks index falling 0.5 percent, with declines led by BHP BHP.AX and Rio Tinto's RIO.AX which fell 0.8 percent and 0.3 percent respectively.
Compounding lower commodity prices, news earlier this week that BHP suspended all iron ore rail operations in Western Australia after a train was forcibly derailed lengthened the shadow over BHP shares. Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.3 percent, dragged down mainly by dairy-related stocks after news global dairy prices had dropped for the sixth straight fortnightly auction early on Wednesday. Milk ATM.NZ and Synlait Milk SML.NZ plunged more than 4 percent each.