News: XMJ Australia, NZ shares extend losses as N. Korea missile launch dims mood

(Updates to close)

Aug 29 (Reuters) - Australian shares lost ground for the third session on Tuesday, tracking falls in regional equity markets as tensions escalated on the Korean peninsula after North Korea fired a missile over northern Japan.

The losses were led by financials, pressuring the S&P/ASX 200 index (xjo) down 0.7 percent, or 40.892 points, to 5669 at the close. The benchmark fell 0.6 percent on Monday.

The selloff was triggered by North Korea firing a ballistic missile over Japan's northern Hokkaido island into the sea earlier on Tuesday, sharply escalating tensions in the region.

The latest act of provocation by North Korea comes only weeks after U.S. President Donald Trump engaged in a war of words with Pyongyang, which had threatened to fire missiles at Guam, a U.S. held Pacific island.

The financial index .AXFJ extended its fall, closing lower for a fifth consecutive session as the big four banks lost roughly between 1.2 percent and 1.3 percent.

Commonwealth Bank of Australia (CBA) slumped to a nine-month low, extending losses after the Australian Prudential Regulation Authority (APRA) on Monday said it would establish an inquiry into the bank, following its alleged breaches of money-laundering and counter-terrorism finance rules.

Healthcare stocks also weighed on the market; the sector's index .AXHJ ended 0.9 percent lower with CSL Ltd (CSL) down 1.1 percent.

The materials Index .AXMJ pared most of its losses on the back of a rise in base metal prices. [MET/L]

Gold miner Newcrest Mining Ltd (NCM) rose 2.2 percent, while Northern Star Resources Ltd (NST) gained 3 percent as gold prices rose for a third day. [GOL/]

New Zealand's benchmark S&P/NZX 50 index (nz50) fell 1.1 percent, or 88.53 points, to finish the session at a two week low of 7,738.34.

The telecommunication sector was the biggest drag on the index as Chorus Ltd (CNU) lost 7.7 percent to end at a five-month low after it reported weak annual results on Monday that missed analysts' estimates.

Index heavyweight Fletcher Building Ltd (FBU) and Telecommunications service provider Spark New Zealand Ltd (SPK) lost 2.6 percent and 1.5 percent, respectively.