Australian shares were lower on Thursday, with...

Australian shares were lower on Thursday, with commodity-related stocks hit hard by the stronger U.S. dollar which surged when the U.S. Federal Reserve raised its interest rate target by a quarter point, and hinted at a brisker pace of rate hikes next year.

The increase in the federal funds rate to between 0.50 percent and 0.75 percent was widely expected but investors were unnerved as the Fed also hinted at three hikes in 2017, up from two earlier. [MKTS/GLOB]

The unanimous rate decision came as president-elect Donald Trump prepares to take office with promises to boost growth through fiscal measures.

Fed Chair Janet Yellen said some policymakers had begun shifting their assumptions about fiscal policy, while adding Trump's election had put the central bank under a "cloud of uncertainty".

The S&P/ASX 200 index (xjo) was 0.9 percent, or 49.32 points, lower at 5,536 by 0130 GMT. The benchmark had fallen just once in previous seven sessions.

Financials, which had seen a rally sparked by Donald Trump's election to president, were trading in the red, with "Big Four" banks sticking to the broader trend.

"Obviously we didn't get a ride on the speeding train. What you're seeing is a reflection of the slowdown in U.S. after the rate decision, but a lot of it is currency impact," said Tony Farnham, an economist with Patersons Securities.

The Fed decision sent the U.S. dollar up 1.3 percent to its highest in nearly 14 years. [FRX]

"You had gold and oil prices fall way more after the dollar got stronger, which reflected in selling in materials and energy stocks," Farnham added.

Gold hit a 10-month low and the ASX gold index .AXGD touched its lowest in seven months. [GOL/]

Newcrest Mining (NCM) fell as much as 5.2 percent, while Northern Star Resources (NST) claimed a 10-month low.

Global miners, including BHP Billiton (BHP), Fortescue Metals Group Ltd (FMG) and Rio Tinto (RIO), also joined the downward parade, with their combined falls hitting the broader index hardest.

Following losses in these heavyweights, the Aussie benchmark mining index .AXMM registered its worst day in more than two weeks.

Declines in oil prices drove energy stocks down, with Woodside Petroleum (WPL) and Santos (STO) dropping 2.8 percent and 9 percent, respectively. [O/R]

New Zealand's benchmark S&P/NZX 50 index (nz50) fell 0.2 percent, or 15.98 points, to 6,781.88, in its fifth session of losses.

Consumer staples and real estate stocks led the losses. Sky Network Television (SKT) was biggest the biggest drag on the benchmark index, while poultry producer Tegel Group (TGH) slumped 16.13 percent to a record low.