* Powell testimony raises fears of U.S. rate hikes
* Lower metals prices erode big minersRio Tinto has worst session in 10 months (Updates to close)
March 1 (Reuters) - Mining heavyweights Rio Tinto (LON:RIO) RIO.AX and BHP Billiton (LON:BLT) BHP.AX were the focal point of declines inAussie shares on Thursday as commodity prices weakened, whilethe broader market retreated on fears of rising U.S. interestrates.
While testifying before the U.S. House of Representatives,Fed Chair Jerome Powell vowed on Tuesday to prevent the U.S.economy from overheating while acknowledging that the economyhad strengthened recently, a remark that prompted investors towager on four rate increases in 2018. manufacturing and jobless claims data expected latershould provide a further indication of the strength of the U.S.economy and potentially add to uncertainty over the tempo ofinterest rate hikes.
The S&P/ASX 200 index .AXJO fell 0.7 percent, or 42.7points to 5,973.3 at the close of trade. The benchmark closeddown 0.7 percent on Wednesday.
Rio Tinto, trading ex-dividend, marked its worst session inmore than 10 ten months after dropping 4.1 percent. BHP closed1.3 percent lower. Broader metals and mining stocks were alsolower in line with metal prices.
Iron ore on the Dalian Commodity Exchange DCIOcv1 dropped0.55 percent to 543 yuan a tonne on Wednesday, while copperprices slipped to their lowest in two weeks. IRONORE/ MET/L
Oil prices fell on Wednesday after official data showed alarger-than-expected increase in U.S. crude inventories, whichweighed heavy on the Aussie energy index .AXEJ , causing a 2.2percent drop. O/R
Australia's "Big Four" banks closed between 0.2 percent and0.9 percent lower.
Shares in commercial explosives maker Orica Ltd ORI.AX closed down 3.5 percent and near a three-month low after thecompany said its first half earnings before interest and taxwould be hit by charges totalling A$300 million ($231.78million) Zealand's benchmark S&P/NZX 50 index .NZ50 closed down0.4 percent, or 31.11 points, to finish the session at 8,342.71,snapping a six-session run of gains.
a2 Milk Co ATM.NZ , down 1 percent, was the biggest drag onthe index after its recent stratospheric gains.
Skycity Entertainment Group SKC.NZ closed 2.1 percentlower after going ex-dividend.
Shares in struggling construction company Fletcher Building FBU.NZ closed 1.2 percent lower after it disclosed it had beengranted a waiver on the breach of covenants under its U.S.private placement (USPP) funding arrangements. = 1.2943 Australian dollars)