Australian shares slipped on Tuesday, with financials...

Australian shares slipped on Tuesday, with financials underperforming as U.S. election uncertainty and economic events kept investors on the defensive.

The market also awaited the Reserve Bank of Australia's policy review due later in the day where it is seen keeping its cash rate steady at a record-low of 1.50 percent.

Sentiment was already fragile amid a U.S. Federal Bureau of Investigation probe into democratic presidential candidate Hillary Clinton's use of a private email server.

The S&P/ASX 200 index (xjo) fell 39 points or 0.73 percent to 5,278.7 by 0112 GMT.

Manufacturing sector activity in China' - Australia's biggest export market - expanded at the fastest pace in more than two years in October, a survey showed. But that didn't appear to impact stock prices.

"Elections rarely have the ability to influence fundamentals materially. However Trump is such a wild card that an election win to him does have some potential to destabilise markets," said Angus Gluskie, managing director at White Funds Management.

But a win for Clinton's Republican rival Donald Trump is seen as unlikely despite the latest FBI-lined twist ahead of the Nov. 8 election, Gluskie said.

Apart from the RBA meeting, markets are also watching out for Bank of Japan policy review later in the day and the Federal Reserve meeting on Wednesday. U.S. payrolls for October is also due on Friday.

The financial index .AXFJ lost ground in four of the last five sessions, shedding 0.6 percent.

Australia's biggest general insurer, Insurance Australia Group (IAG) dipped 1.1 percent for a fifth trading session, to its lowest in a month, while the 'Big Four' banks fell 0.3 percent to 0.8 percent.

The energy index .AXEJ fell to its lowest in about a month after oil prices fell more than 3 percent on Monday, over doubts about OPEC's ability to implement its planned production cuts. [O/R]

Heavyweights Woodside Petroleum (WPL) and Oil Search (OSH) gave up around 2.1 percent.

Losses in the materials sector were led by iron giant BHP Billiton (BHP), which slipped 2 percent to end two days of gains.

Crown Resorts (CWN) also stumbled 1.6 percent, after 18 of its staff members were arrested in China last week, for suspected "gambling crimes".

Airline company Qantas (QAN) lost 3 percent after it said on Monday that its half-year profit could fall nearly a sixth, helping shares of rival Virgin Australia (VAH) rise 1.1 percent.

New Zealand's benchmark S&P/NZX 50 index (nz50) slipped 0.4 percent or 28.9 points to 6,931.78, with consumer discretionary and health care stocks accounting for more than three-quarters of the losses.

Discount retailer Warehouse Group (WHS) led losses, down 1.7 percent, while Sky Network Television (SKT) extended previous session declines and fell 1.5 percent.