* Aussie shares fall for 3rd straight session
* Financial index down 0.4 pct; energy stocks rise 0.7 pct (Updates to close, adds quotes)
By Niyati Shetty
March 12 (Reuters) - Australian shares reversed course and edged lower on Tuesday, as gains in mining and energy stocks were offset by losses in financials at the fag end of the session after the sector came under further political scrutiny.
The S&P/ASX 200 index ended down 0.1 percent, or 5.40 points, at 6,174.80. The benchmark declined 0.4 percent on Monday.
“The Australian Treasurer Josh Frydenberg came out in the last few hours and said that his government would be walking away from banning trailing commissions for brokers, financial planners and financial advisers,” said Kyle Rodda, market analyst at IG Markets.
“Potentially it’s being seen now that this will put banks back into the spotlight as a political football. It relates to the view that the (opposition) labour party will take a hard line on the financials sector, as a whole.”
The financial sector has been under the scanner ever since revelations of widespread misconduct led to a year-long public inquiry.
The federal government reversed a key recommendation of the inquiry and will no longer ban trailing commissions - a fee paid by investment management firms to financial advisors, the Australian Financial Review reported here on Tuesday.
Financials saw a turnaround in the last hour of trade, with the index falling 0.4 percent at close.
Lender Westpac Banking Corp lost 0.6 percent, while Australia and New Zealand Banking Group Ltd slipped 1.2 percent.
Meanwhile, resource-based stocks gained on encouraging comments from the Sino-U.S. trade front.
U.S. and China have set the next steps in “working arrangements”, Chinese state news agency Xinhua said, as top officials from the two sides discussed key issues in their trade talks over a telephone call.
Markets await a resolution to the long-drawn tariff dispute which has taken a toll on the economic growth of China - Australia’s largest importer of raw materials.
“There is potential optimism still on the trade deal that is playing through,” said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.
Mining stocks gained 0.3 percent helped by higher iron ore and base metal prices. Global miners BHP Group Ltd and Rio Tinto Ltd added 1.1 percent and 1.3 percent, respectively. Iron ore miner Fortescue Metals Group Ltd rose 2.7 percent.
Meanwhile, energy stocks gained 0.7 percent buoyed by a rise in oil prices.
Index heavyweight Woodside Petroleum Ltd rose 0.8 percent, while peer Santos Ltd was 1.9 percent higher.
Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index ended nearly flat at 9,397.25.
Auckland International Airport Ltd added 0.8 percent, while dairy products maker a2 Milk Company Ltd was marginally lower. (Reporting by Niyati Shetty in Bengaluru, Additional Reporting Rashmi Ashok; Editing by Gopakumar Warrier)