* Rio Tinto (LON:RIO) ends at weakest in near 7 mths
* Boral, G8 Education biggest decliners, on weak outlook
* Gold miners surge on safe-haven appeal (Updates to close)
Aug 26 (Reuters) - Heavy selling of banking shares and iron ore miners pushed Australian shares down more than 1% on Monday, after a dramatic escalation in the U.S.-China trade war threatened to further undermine global economic growth.
The S&P/ASX 200 index .AXJO ended down 1.3%, or 83 points at 6,440.1, wiping out most of the 1.8% it gained last week.
On Friday, U.S. President Donald Trump announced a 5% additional duty on $550 billion in targeted goods from China, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. products. MKTS/GLOB
China is the biggest buyer of Australia's resource exports, and the escalating trade pressure could further dampen its domestic demand.
Iron ore is Australia's top revenue-earner and miners of the steel-making material were among the biggest weights on the benchmark index.
Iron ore miners BHP Group BHP.AX , Rio Tinto RIO.AX and Fortescue Metals FMG.AX lost between 2.1% and 5.3%. Rio closed at its weakest in nearly 7 months.
Energy units .AXEJ also tumbled 3.1%, with oil and gas firms Santos Ltd STO.AX and Woodside Petroleum WPL.AX declining 2.5% and 3.7%, respectively.
Australian gold stocks .AXGD had a field day, surging 6.8%, as wider uncertainty boosted the safe-haven appeal of the yellow metal. GOL/
Gold miner Resolute Mining RSG.AX was the top gainer on the benchmark and closed 10.3% higher.
Heavyweight "big four" banks lost between 0.7% and 1.4%.
Australia's largest building materials maker Boral BLD.AX and educational services provider G8 Education GEM.AX led declines on the index, as both flagged weaker annual profit outlook. Zealand's benchmark S&P/NZX 50 index .NZ50 closed 1.3% lower at 10,483.47.
Dairy products firm Fonterra Shareholders' Fund FSF.NZ led falls on the index, after having lost 4.5% on the day.