* Aussie shares end lower for third straight session
* Materials stocks lead declines
* BHP is the biggest drag on benchmark (Updates to close)
June 26 (Reuters) - Materials stocks drove Australian shares lower on Tuesday, with BHP leading declines after inking a deal with Brazilian authorities that settles a lawsuit over a 2015 dam disaster.
The S&P/ASX 200 index .AXJO fell 0.2 percent or 12.80 points to 6,197.60 at the close of trade. The benchmark declined 0.2 percent on Monday.
Samarco SAMNE.UL and parent companies Vale SA VALE5.SA and BHP BHP.AX have signed a deal with Brazilian authorities that settles a 20 billion reais ($5.30 billion) lawsuit related to a 2015 dam burst that killed 19 people, BHP said on Monday.
Shares of the world's biggest miner slipped 1 percent, dragging the benchmark.
The wider metals and mining index .AXMM also traded lower, underpinned by a fall in iron ore and copper prices.
Global miner Rio Tinto (LON:RIO) Ltd RIO.AX dipped about 1.8 percent to a near seven-week low, while BlueScope Steel Ltd BSL.AX declined 3.1 percent to its lowest since June 1.
Health care stocks were also in the red, with index heavyweight CSL Ltd CSL.AX dropping 0.7 percent, while Ramsay Health Care Ltd RHC.AX slid 2 percent to its lowest in more than three-and-a-half years.
Meanwhile, New Zealand's benchmark S&P/NZX 50 index .NZ50 slipped 0.1 percent or 6.44 points to finish the session at 8,989.80.
Industrials were the top losers on the main index, with Auckland International Airport Ltd AIA.NZ falling 1.2 percent.