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SYDNEY, March 26 (Reuters) - Australian shares finished the session down 0.8 percent on Tuesday as blue-chip financials and miners weighed on the market after weak metal prices and renewed worries about the prospects for Cyprus and the euro zone hit investor sentiment.
Top lender Commonwealth Bank of Australia posted the biggest loss among banks, down 1 percent.
Blue chip iron ore miners BHP Billiton Ltd and Rio Tinto Ltd lost 1.4 percent and 2.3 percent respectively.
Euro zone finance ministers said the rescue programme agreed for Cyprus on Monday was a new template for resolving euro zone banking problems and other countries which may have to restructure their banking sectors.
"Comments that the Cyprus resolution could be used as a 'template' for future bailouts shocked the markets and managed to change the overnight accent and reverse our fortunes," said Ben Taylor, sales trader at CMC Markets.
The S&P/ASX 200 index lost 40 points to finish the session at 4,950.2. The benchmark rose 0.5 percent on Monday.
"Materials are taking the brunt of the selling," said Chris Weston, chief market strategist at IG Markets.
"In the short term we will be watching last week's low of 4,927 where a break could potentially target 4,846, [which would be] a 38.2 percent retracement of the November rally."
The market is currently up some 6.5 percent for the year, enjoying a bull run bolstered by a strong earnings season and receding global worries.
Gold miners were weaker after bullion fell in heavy trade overnight as the bailout deal for Cyprus decreased the metal's safe-haven appeal. Newcrest Mining Ltd lost 1.8 percent while rival Regis Resources Ltd plunged 1.9 percent.
Oil miners were also weaker as Brent price gains were curbed by caution about the Cyprus bailout and Europe's economy. Santos fell 1.3 percent while Oil Search Ltd finished flat.
Elsewhere, defensives were weaker. Supermarket giant Woolworths Ltd slipped 0.1 percent while Wesfarmers , owner of rival Coles, fell 0.4 percent. Top telecommunications provider Telstra Ltd and blood products maker CSL Ltd both fell 0.7 percent.
Trade in Australia's Sundance Resources 's was suspended after the company said its suitor Hanlong would fail to meet a deadline on Tuesday to supply credit approval for its long-delayed $1.4 billion takeover offer, and would decide after April 3 whether to scrap the deal.
New Zealand's benchmark NZX 50 index finished the day inching up 0.1 percent or 5.3 points to 4,346. (Reporting by Thuy Ong; Editing by Eric Meijer)