* Australian benchmark snaps 7-session winning streak
* Energy stocks fall on weak oil prices
* NZ down for third straight session (Updates to close)
By Arpit Nayak
June 11 (Reuters) - Australian shares fell on Thursday by their most in six weeks, as a gloomy economic outlook from the U.S. Federal Reserve crushed hopes for a swift recovery from the coronavirus-induced slump.
The S&P/ASX 200 index .AXJO fell 3.1% to 5,960.6 at the close of trade, snapping a seven-session winning streak.
The Fed forecast the U.S. economy would contract 6.5% this year. Fed Chair Jerome Powell emphasised the recovery would be a long road and that policy would have to be proactive with rates near zero out to 2022. Fed's statement will breathe realism into the market," said Simon Herrmann, an equity analyst at Wise-Owl, adding that the market rally in recent weeks might have been too optimistic.
"Given where we are, that means we'll probably need to go through a few weeks of falling prices to let the real-world economy catch up with the stock markets."
Investor sentiment was also hit by rising diplomatic tensions between Australia and China after Australia called for an international inquiry into the source and spread of the coronavirus. financials .AXFJ were the biggest drags on the benchmark, with the 'Big Four' banks shedding between 4.4% and 6.2%.
Woodside Petroleum WPL.AX and Santos STO.AX led a 5.4% decline in the energy sub-index .AXEJ , as oil prices slipped on concerns of slow demand growth and record U.S. crude stockpiles. O/R
A 5.3% surge in gold stocks .AXGD capped losses in the metals and mining sub-index .AXMM .
Gold prices rose to a one-week high overnight amid broader weakness in equities but eased slightly in Asian trading hours as investors booked profits. GOL/
Top gold miner Newcrest Mining NCM.AX climbed 5.7%, while Northern Star Resources NST.AX finished 6.8% higher.
New Zealand's benchmark S&P/NZX 50 index .NZ50 dropped 0.9% to 11,154.93, marking its third straight session of falls.
Local shares of lenders Westpac Banking Corp WBC.NZ and Australia and New Zealand Banking Group ANZ.NZ fell 7.5% and 5.6%, respectively.