SYDNEY, March 20 - Australian shares fell 0.9 percent on Thursday morning after Federal Reserve Chair Janet Yellen rattled investors by suggesting that interest rate hikes may come sooner than previously thought.
Yellen's comments jolted U.S. bond and stock prices lower, with Australian equities falling in sympathy as traders recalibrated the timeline for the Fed's policy tightening.
The Fed will probably end its massive bond-buying program this fall, and could start raising interest rates earlier than expected, Yellen said in her first news conference as the head of the central bank.
Simon Twiss, dealer at Arnhem Investment Management said Yellen's comment was "a little bit more hawkish" than expected.
Global miners BHP Billiton Ltd and Rio Tinto Ltd dropped 1.1 percent and 1.2 percent respectively. Fortescue Metals Group also fell 1.1 percent.
"We saw some sell-off in the resources names overnight...so that will lead us lower," Twiss said. "I just think it seems that overall weakness in iron ore prices over the last few weeks is shaking the confidence in those sort of names."
The S&P/ASX 200 index lost 45.3 points to 5,310.3 by 0037 GMT. The benchmark edged up 0.2 percent on Wednesday.
The market has drifted lower in March after rallying 4.1 percent in February, as tensions in Ukraine and disappointing data from China soured sentiment.
The country's biggest banks were mostly lower, with both Commonwealth Bank of Australia easing 0.3 percent and Westpac Banking Corp losing 0.4 percent.
Gold miner Newcrest Mining Ltd plunged 6.9 percent, after the precious metal fell about 2 percent on Wednesday, its biggest one-day drop in three months.
Domestic consumer stocks also took a hit, as top Supermarket chain Woolworths Ltd lost 0.5 percent and Coles-owner Wesfarmers Ltd dropped 1.2 percent.
Australia's biggest department store Myer Holdings Ltd dropped 4.5 percent, touching a one-month low earlier, after it reported a decline in first-half profits and offered a downbeat outlook for the rest of year.
"It's not a bad report, but it's just flat and subdued. You need to see growth and growth hasn't been there," said IG market strategist Evan Lucas.
Lucas said the risk-off sentiment was driving some investors to relocate to REITS, lifting Westfield Group up 0.2 percent.
Australand Property Group climbed 2.0 percent after Stockland Corporation Ltd bought about 20 percent stake in the company a day earlier.
New Zealand's benchmark NZX 50 index fell 0.2 percent to 5,146.0 (Reporting by Maggie Lu Yueyang; Editing by Shri Navaratnam)