* Fed tempers aggressive rate cut hopes
* Financials lose, mining sector flat
* RBNZ holds rates
*
By Rushil Dutta
June 26 (Reuters) - Australian shares were subdued on Wednesday, in line with equities worldwide, after U.S. Federal Reserve officials dampened market expectations of aggressive rate cuts this year.
The S&P/ASX 200 index .AXJO fell 0.1% to 6,651.90 points by 0217 GMT. The benchmark was 0.1% lower on Tuesday.
Equity markets have rallied this month as investors priced in a rate cut as early as the Fed's July policy-setting meeting. While a 25 basis point cut is being seen as a certainty, many had even dared to expect a half percentage point cut.
St. Louis Fed President James Bullard tempered those expectations on Tuesday, saying he did not think the U.S. economy is dire enough to warrant a 50-basis-point cut in July, even though he pushed to lower rates last week. Fed Chairman Jerome Powell said the central bank was "insulated from short-term political pressures," thwarting U.S. President Donald Trump's demand for a significant rate cut.
"I suppose with the S&P 500 off about a percent or so, the markets have been running on a prospect of shift in Fed policy. Anything that undermines these expectations is going to have some sort of an impact," said Damien Hennessy,
co-founder of Heuristic Investment Systems.
The Australian financial sector, the biggest on the main index by weightage, led the losses on Wednesday.
The country's four biggest lenders were off in a range of 0.3%-0.6%.
Tuesday's Fed commentary gave the U.S. dollar some respite, as it edged up from three-month lows. That weakened the Australian dollar marginally, but not enough to support stocks of miners, many of which sell their goods in foreign markets for U.S. dollars.
The mining sub-index .AXMM was flat with BHP Group BHP.AX shares marginally lower, while Rio Tinto (LON:RIO) RIO.AX added 0.5%.
A resurgent dollar also knocked gold prices off a six-year peak. Aussie gold stocks, which track the precious metal, also declined in response.
Australian gold index heavyweight Newcrest Mining NCM.AX shed 1%, while smaller rivals St Barbara SBM.AX and Northern Star Resources NST.AX gave up 1.1% and 0.7% respectively.
New Zealand's benchmark S&P/NZX 50 index .NZ50 was marginally lower at 10,409.23 after the Reserve Bank of New Zealand stood pat on benchmark interest rates, maintaining it at a record low of 1.5%.
However, the central bank signalled that lower interest rates may be needed in the future, citing subdued domestic growth and global economic weakness. in industrials and utilities shares were offset by losses in healthcare and telecom stocks.
Medical devices maker Fisher & Paykel Healthcare FPH.NZ was the top decliner on the benchmark index, down 2%.