Tech, healthcare drag Australian shares lower as U.S. yields tick up

* Healthcare stocks decline most in nearly two weeks

* Tech stocks down after two straight days of falls

* NZ down after data shows economic contraction in Q4 (Updates to close)

March 18 (Reuters) - Australian shares fell on Thursday, dragged down by technology and healthcare stocks as U.S. bond yields remained elevated, while an economic contraction in the final quarter of 2020 sent New Zealand’s benchmark index to its biggest drop in two weeks.

Australia’s S&P/ASX 200 index slipped 0.7% to 6,745.70, marking its second straight session of fall.

On Wednesday, the Federal Reserve projected a surge in U.S. economic growth and inflation this year as the COVID-19 crisis eases, and said it would keep its target interest rate unchanged until at least 2024.

It gave no indication that it would act on rising inflation. Benchmark 10-year U.S. Treasury yields edged up to 1.6550%, not far from the highest since January last year hit on Wednesday.

“We have seen the 10-year bond yield up...which is having a negative impact on our markets,” said Henry Jennings, a senior analyst at Marcustoday Financial Newsletter.

“High-priced stocks, tech stocks, growth stocks that are looking for growth and income way out in the far future horizons are impacted usually in this kind of cash-flow bubble.”

Healthcare stocks fell more than 1.5%, their biggest in nearly two weeks, after a seven-session winning streak. CSL slid nearly 2%, while Cochlear fell over 2.6%.

Technology stocks declined about 1.3% after two straight session of gains. Afterpay shed 1.8%, while WiseTech Global finished 0.7% weaker.

New Zealand’s benchmark S&P/NZX 50 index settled about 1% down, its biggest daily fall since March 4, after data showed the economy contracted in the final quarter of last year, raising concern of a second recession and quashing market talk that the central bank may look to hike interest rates sooner. (Reporting by Nikhil Subba in Bengaluru; Editing by Subhranshu Sahu)