* Australian benchmark index down 2.5% for week
* Crime regulator may broaden Westpac lawsuit
* Australia pushes states to reopen internal borders (Updates to close)
By Arpit Nayak
June 12 (Reuters) - Australian shares wrapped up their worst week in seven, with the benchmark index sliding nearly 2% on Friday on fears of a second wave of COVID-19 infections and a gloomy economic outlook from the U.S. Federal Reserve.
The three major U.S. stock indexes fell more than 5% on Thursday, posting their worst day since mid-March, after a leading health expert warned the coronavirus death toll could touch 200,000 by September.
The S&P/ASX 200 index fell 1.9% to 5,847.8, marking its second straight session of losses. For the week, it dropped 2.5% after six straight weeks of gains.
“We are probably in what I would call a circular bear market now,” said Brad Smoling, managing director at Smoling Stockbroking.
“The euphoria of all the stimulus and free money is starting to wane and investors will start to take notice of earnings and balance sheets of businesses that are going to reopen.”
In a bid to revive the ailing Australian economy, the federal government is pushing state and territory leaders to reopen internal borders and drawing up plans to allow international students to return as the country’s COVID-19 cases fall.
Financials fell 3.8% for the week after two weeks of gains.
Westpac Banking Corp, Australia’s No. 2 lender, dropped 3.3% on Friday after the financial crime regulator said it may add additional breaches of anti-money laundering laws to its lawsuit against the lender.
Energy stocks slumped 4% as oil prices tumbled, with sector heavyweights Woodside Petroleum and Santos losing 5.3% and 3.6%, respectively.
New Zealand’s benchmark S&P/NZX 50 index fell 2.2% to 10,905.94, posting a weekly drop of 2.4%.
Local shares of Westpac dropped 4.1%, while those of Australia and New Zealand Banking Group eased 3.5%. (Reporting by Arpit Nayak in Bengaluru; Editing by Subhranshu Sahu)