* Nearly half of workers in Melbourne's private firms to get wage subsidy
* Miners fall, but set for best week since May
* Energy stocks head for biggest weekly gain in nearly four months
By Arpit Nayak
Aug 7 (Reuters) - Australian shares retreated on Friday, with miners leading losses, as heightened coronavirus-induced restrictions following a second wave of infections stoked fears of further economic damage and unemployment.
The S&P/ASX 200 index .AXJO fell 0.6% to 6,004.3 by 0104 GMT, but was set to notch a weekly gain of 1.4%.
Australia's second-largest city, Melbourne, went into a strict six-week lockdown on Thursday to limit a recent spike in cases even as policymakers attempt to soften the virus' economic blow through stimulus and financial aid. half of all workers from private companies in Melbourne will receive the country's wage subsidy scheme, Treasurer Josh Frydenberg said, but concerns over wide-scale job losses still linger. Minister Scott Morrison said on Thursday unemployment would peak at 10%, but counting workers covered under the wage subsidy scheme, effective unemployment would be closer to 14%.
Heavyweight miners .AXMM gave up some of their massive gains from the previous session, but were still set for their best week since May 22. Top miners BHP Group BHP.AX and Rio Tinto (LON:RIO) RIO.AX on Friday eased 1.6% and 2.1%, respectively.
The "Big Four" banks led declines among financials .AXFJ , with top lender Commonwealth Bank of Australia CBA.AX losing 0.9% and Westpac Banking Corp WBC.AX slipping 1%.
Insurance Australia Group IAG.AX dropped 1.4% after reporting a substantial plunge in full-year profit as rising claims costs hurt its bottom line. stocks .AXEJ were the only major sub-index trading in positive territory and set for their best week since April 10 as oil prices settled just below five-month highs after solid overnight gains. O/R
Industry giant Woodside Petroleum WPL.AX added 0.8%, while Santos STO.AX rose 1.6%.
New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.7% to 11,683.64, with financials being the biggest drag.
Local shares of lenders Westpac Banking Corp WBC.NZ and Australia and New Zealand Banking Group ANZ.NZ shed 1.7% and 1.1%, respectively.