(Updates to close)
SYDNEY May 19 (Reuters) - Australian shares fell 1.3 percent on Monday, pulled down by blue chip banking and mining stocks in muted trade as iron ore and Chinese steel futures slumped, while UGL dropped after receiving only one bid for its real estate arm.
The S&P/ASX 200 index lost 70 points to 5,409.0 at the close of trade, its biggest one-day percentage drop since mid-April. The benchmark fell 0.6 percent on Friday, but added 0.3 percent for the week.
Shares in UGL Ltd lost 9.7 percent. The Australian engineering and property management company will likely shelve the planned A$1.2 billion sale of its property services arm after it received just one binding offer for the asset, a source familiar with the process told Reuters.
New Zealand's benchmark NZX 50 index slipped 0.4 percent to 5,167.8. (Reporting by Thuy Ong; Editing by Eric Meijer)