May 27 (Reuters) - Australian shares fell on Wednesday, as developments on the Sino-U.S. diplomatic tiff over Hong Kong dampened sentiment and cancelled out any boost from easing lockdown restrictions and the resumption of normal activity.
The S&P/ASX 200 index .AXJO was down 0.48% at 5,752.3 points, as of 0041 GMT. The benchmark ended 2.9% firmer on Tuesday.
Casting darker shadows over the U.S.-China ties were reports that Washington was working on a strong response to Beijing's planned national security legislation for Hong Kong and that it would be announced before the end of the week. .AXMM were the biggest drag on the benchmark, shedding 3.4% with shares of heavyweights BHP Group BHP.AX and Rio Tinto (LON:RIO) Ltd RIO.AX declining 2.9% and 3.2%, respectively.
Gold stocks .AXGD dropped 5.4%, led by Northern Star Resources Ltd NST.AX , down 7.05%, followed by Saracen Mineral Holdings Ltd SAR.AX that lost 6.93%.
Overnight gold prices had taken a blow as widening risk appetite saw investors pulling back from safe havens. Spot gold prices, however, traded flat on Wednesday.
Meanwhile, financials .AXFJ rose 2.62% on the back of gains in National Australia Bank Ltd NAB.AX .
Shares of the country's third-largest lender rose 4.9% after the bank increased its capital raising plan by A$750 million, supported by strong interest from shareholders. Virgin Money (LON:VM) UK PLC VUK.AX added 8.86% and was among the top percentage gainers in the benchmark.
In New Zealand, the benchmark S&P/NZX 50 index .NZ50 rose 0.37% to 10,955 after comments from the central bank boosted financial stocks.
New Zealand's Central Bank said the financial system is in a solid position to weather the significant economic impact caused by the pandemic and support the country's recovery. shares of Australia and New Zealand Banking Group ANZ.NZ and Westpac Banking Corp WBC.NZ were the top gainers on the bourse advancing 5.08% and 4.62%, respectively.