* Banks lead losses, NAB falls most as Morgan Stanley (NYSE:MS) cuts PT
* Iron ore units gain as commodity prices support
* Ryman Healthcare tops NZX, ends at record high (Updates to close)
Dec 10 (Reuters) - Australian shares fell on Tuesday, with banking stocks leading losses, as investors waited to see if Washington will proceed with new tariffs on China this weekend that could change the course of their months-long trade war.
The S&P/ASX 200 index .AXJO snapped a three-session rally to end 0.3%, or 23.1 points, lower at 6,706.9.
Markets are in a wait-and-see mode, said James Tao, market analyst at CommSec, as they await headlines from Washington or Beijing.
U.S. President Donald Trump has until Dec. 15 to decide whether Washington will press pause on fresh tariffs that are scheduled to take effect against $156 billion worth of Chinese goods.
Heavyweight bank units .AXFJ lent most to the benchmark's losses, with the nation's third-largest lender National Australia Bank Ltd NAB.AX giving up 1.5%.
Brokerage Morgan Stanley cut NAB's price target on expectations of further capital raising and an another dividend cut in fiscal 2020. manager IOOF Holdings Ltd IFL.AX bucked sectoral trend to end 0.6% higher after Australia's banking regulator on Monday said it would allow IOOF to hold controlling stakes in superannuation licenses currently owned by ANZ. shares had risen as much as 5.8% during the session before giving up some gains.
Iron ore miners were among the few gainers for the day as prices of the steel-making ingredient rose to their highest in more than four months on supply uncertainties expected to emerge during the first quarter of next year. IRONORE/
The mining index .AXMM added 0.6%, with miners BHP Group Ltd BHP.AX , Rio Tinto (LON:RIO) Ltd RIO.AX and Fortescue Metals Group Ltd FMG.AX finishing between 1.1% and 1.3% higher.
Oil and gas producers were also in the red, pressured by oil prices slipping for a second straight session. Santos Ltd STO.AX fell 1.3%, while bigger peer Woodside Petroleum WPL.AX ticked 0.8% lower. O/R
New Zealand's benchmark S&P/NZX 50 index .NZ50 added 0.5%, or 54.63 points, to 11,284.22.
Ryman Healthcare Ltd RYM.NZ gained the most, rising 3% to end at a record high.