Australian shares fell on Thursday, pulled down by financials...

Australian shares fell on Thursday, pulled down by financials after the government announced a wide-ranging inquiry into the country's banking sector.

The inquiry reverses the government's long-held opposition to such a commission as political pressure mounts following a string of scandals in the sector.

"The current Liberal government had been resisting this push - it was seen as some undermining the four pillars policy with regards to the Australian banks being too big to fail during the global financial crisis," said James McGlew, executive director of corporate stockbroking at Argonaut.

"But since then, there have been concerns with regards to the performance of a number of banks. There have been a number of scandals with CBA being hit with the most recent one. So the market has taken a big stick to the banks."

The S&P/ASX 200 index (xjo) fell 0.6 percent or 37.32 points to 5,973.80 by 0121 GMT. The benchmark rose 0.45 percent on Wednesday and 1.2 percent so far this month, on track for two consecutive months of gains.

Financials accounted for more than half of the losses, with the Australian financial index .AXFJ falling 1 percent to its lowest since Oct. 9.

The "Big Four" banks - Westpac Banking Corp (WBC), Commonwealth Bank of Australia (CBA), National Australia Bank Ltd (NAB) and Australia and New Zealand Banking Group Ltd (ANZ) - dipped between 0.5 percent to 2.1 percent.

Commonwealth Bank of Australia (CBA) led the declines, sliding 2.1 percent to its lowest since Nov. 8.

Materials stocks also contributed to the decline, with heavyweight BHP (BHP) dipping 1.1 percent, while its rival Rio Tinto Ltd (RIO) fell slightly to its lowest since Nov. 1.

Aristocrat Leisure Ltd (ALL) reversed from a record high to fall 5.2 percent and was one of the biggest percentage losers on the index. The gaming machine maker said it will acquire Seattle-based gaming company Big Fish Games, a unit of Churchill Downs , for $990 million in cash.

Meanwhile, New Zealand's benchmark S&P/NZX 50 index (nz50) declined 0.2 percent or 17.26 points to 8,124.70. The benchmark was down 0.3 percent on a monthly basis, on track to snap 10 consecutive months of gains.

New Zealand business sentiment sunk to an eight-year low in November amid uncertainty around the new Labour government, an ANZ Bank survey showed.

Auckland International Airport Ltd (AIA) accounted for most of the losses, falling 1.4 percent, while Xero Ltd (XRO) dipped 2.6 percent to a record low.