Australia shares edge lower ahead of RBA policy decision, US tariff deadline

By Sneha Kumar

July 7 (Reuters) - Australian shares started the week slightly lower on Monday, led by losses in mining and banking stocks, as investors exercised caution ahead of the central bank's rate decision meeting and the U.S. tariff deadline.

The S&P/ASX 200 benchmark index .AXJO closed 0.2% lower at 8,589.30 points. The benchmark gained 1% last week.

Markets braced for two key events: Tuesday's Reserve Bank of Australia's policy meeting, where the central bank is expected to deliver a 25-basis-point cut, and Wednesday's expiry of U.S. President Donald Trump's 90-day tariff suspension.

The benchmark hovered around 8,600, while banking stocks have underperformed since the beginning of the month, as profit booking in the sector followed a strong rally since early April on rate cut expectations.

Traders are potentially positioning for risk with the RBA meeting on Tuesday, said Luke Winchester, a portfolio manager at Merewether Capital.

"Momentum at the broader index level has stalled out as Commonwealth Bank (CBA) has fallen roughly 7% from its peak on the 25th June, which creates a headwind as the largest weighting in the index, peaking at over 12% weight."

Commonwealth Bank CBA.AX, Australia's biggest lender and biggest public-listed company by market capitalisation, became the first to cross the A$300 billion valuation mark on June 4.

Financials .AXFJ shed 0.2% during the day with CBA down 0.1%.

Miners .AXMM closed 1.1% lower with BHP BHP.AX and Rio Tinto RIO.AX losing about 0.3% and 0.2%, while Fortescue FMG.AX rose marginally.

Energy stocks .AXEJ slipped 0.2% and gold stocks .AXGD retreated 3.7% to its lowest in nearly two months.

Capping losses for the day, healthcare stocks .AXHJ rose 0.9% to a four-month high, with pharmaceutical giant CSL CSL.AX rising 2.2%.

New Zealand's benchmark S&P/NZX 50 index .NZ50 finished barely changed. The country's central bank is expected to keep borrowing costs unchanged on Wednesday.

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