* China ready to hit back at U.S. with rare earths - Chinese media
* Commodity stocks falter as iron ore, oil prices fall
* NZX eases as industrials drag (Updates to close)
May 29 (Reuters) - Australian shares fell on Wednesday with commodity stocks weakening the most as global growth concerns hurt risk appetite, although rare earths miners gained on the possibility that Beijing could halt exports of these metals to the United States.
The S&P/ASX 200 index .AXJO ended 0.7%, or 44.8 points lower, the benchmark's fourth session of decline in five as tensions between the world's two biggest economies show no signs of cooling off. MKTS/GLOB
The main sub-indexes for both the mining .AXMM and energy .AXEJ sectors closed more than 0.7% lower for the day.
Adding to the miners' woes, China's iron ore benchmark snapped a rally that had led it to record highs, after the Dalian Commodity Exchange announced increases in transaction fees for some futures contracts. IRONORE/
However, while mining heavyweights BHP Group BHP.AX and Rio Tinto (LON:RIO) RIO.AX closed 0.6% and 0.7% lower, rare earths firms such as Lynas Corporation LYC.AX , Northern Minerals NTU.AX and Peak Resources PEK.AX surged to close between 9% and 20.5% higher.
China's Communist Party newspaper warned the United States that the country was ready to use rare earths to strike back in their bitter trade war. China controls 80% of the world's supply of these materials used in everything from headphones to night-vision goggles. currently a takeover target, hit its best in more than one year. Any move by China to crimp supply would increase the importance of Lynas which one of the major producers of rare earths. players in the oil and gas space such as Santos Ltd STO.AX and Origin Energy Ltd ORG.AX fell 1.6% and 2.5%, respectively, as world oil prices weakened after trade war concerns outweighed supply shortfalls. O/R
In other news, engineering contractor Downer EDI DOW.AX lost over 9% to close at its weakest in more than three months after its partner Senvion GmbH filed insolvency proceedings in Germany. Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.3% to 10,096.47, with industrials stocks leading the decline.
Builder Fletcher Building FBU.NZ said Precinct Properties New Zealand PCT.NZ had to push back opening dates for some construction projects due to a delay by its main contractor, a unit of Fletcher. of Fletcher and Precinct finished 2.6% and 3% lower, respectively.