* Banks lead losses, ANZ slumps as it faces criminal charges
* Rio Tinto (LON:RIO) hurt as U.S. tariffs affect Canada presence
* Health stocks buck trend, hit record
* NZ dairy stocks tank as Synlait hikes milk price outlook
By Devika Syamnath
June 1 (Reuters) - Australian shares edged lower on Friday as the banking sector was shaken by news ANZ ANZ.AX is facing criminal charges, while a U.S. move to impose trade tariffs against some of its key trading partners sapped confidence.
The S&P/ASX 200 index .AXJO fell 0.4 percent, dropping 25.4 points to 5986.5 at 0317 GMT. The benchmark gained 0.5 percent on Thursday.
The day started badly for the banking industry after the Australian competition watchdog served Australia and New Zealand Banking ANZ.AX with criminal cartel charges over a $2.3 billion share issue, along with underwriters Deutsche Bank (DE:DBKGn) and Citigroup (NYSE:C). development compounds a publicity nightmare for Australia's biggest financial firms as they grapple with daily allegations of wrongdoing at the public inquiry, which is scheduled to run to the end of the year. was the biggest drag on the benchmark, tumbling 2.4 percent and hitting its lowest in over a month.
"The banks are still not back from the negative press they have been getting in light of the Royal Commission," said Dale Raynes, Associate Director at CPS Capital, referring to the powerful inquiry into the scandal-ridden sector.
Financial stocks .AXFJ were down as much as 1.2 percent, with National Australia Bank NAB.AX and Commonwealth Bank of Australia losing 1.2 percent and 0.9 percent, respectively.
Overall sentiment was fragile on heightened worries about a global trade war. Canada, Mexico and the European Union swiftly responded with retaliatory tariffs on U.S. imports after Commerce Secretary Wilbur Ross announced a 25 percent tariff on steel imports and 10 percent tariff on aluminium imports. mining index was propped up by strength in metal and iron ore prices, though global miner Rio Tinto RIO.AX , whose largest concentration of aluminium smelters is in Canada, dragged the sector.
Rio lost as much as 1.8 percent to its lowest in over three weeks while rival BHP Billiton (LON:BLT) BHP.AX held up 0.7 percent.
Investors took shelter in defensive stocks, driving gains on the gold .AXGD and healthcare .AXHJ indexes which advanced 0.8 percent and 1.4 percent, respectively, with the latter hitting a record.
"Healthcare is kind of the stand-out sector. If you're avoiding the banks, then healthcare is the way to go," said Raynes.
Cochlear Ltd COH.AX hit a record, having added 4.3 percent while Sonic Healthcare SHL.AX gained up to 1.6 percent.
Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 lost 0.3 percent or 21.76 points to 8637.03 at 0236 GMT.
Consumer staples stocks dented the index the most after dairy products maker Synlait Milk SML.NZ on Friday raised its base forecast milk price for the 2017-18 season, signalling higher raw material costs. dropped as much as 4 percent while a2 Milk Company ATM.NZ , which has a stake in the former, lost up to 6.6 percent and was the top drag on the index.
Data at home also came in weak, with New Zealand's terms of trade falling for the first time in more than a year in the March quarter, dropping by 1.9 percent from a record high.