* Rio Tinto ends at weakest in near 7 mths
* Boral, G8 Education biggest decliners, on weak outlook
* Gold miners surge on safe-haven appeal (Updates to close)
Aug 26 (Reuters) - Heavy selling of banking shares and iron ore miners pushed Australian shares down more than 1% on Monday, after a dramatic escalation in the U.S.-China trade war threatened to further undermine global economic growth.
The S&P/ASX 200 index ended down 1.3%, or 83 points at 6,440.1, wiping out most of the 1.8% it gained last week.
On Friday, U.S. President Donald Trump announced a 5% additional duty on $550 billion in targeted goods from China, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. products.
China is the biggest buyer of Australia’s resource exports, and the escalating trade pressure could further dampen its domestic demand.
Iron ore is Australia’s top revenue-earner and miners of the steel-making material were among the biggest weights on the benchmark index.
Iron ore miners BHP Group, Rio Tinto and Fortescue Metals lost between 2.1% and 5.3%. Rio closed at its weakest in nearly 7 months.
Energy units also tumbled 3.1%, with oil and gas firms Santos Ltd and Woodside Petroleum declining 2.5% and 3.7%, respectively.
Australian gold stocks had a field day, surging 6.8%, as wider uncertainty boosted the safe-haven appeal of the yellow metal.
Gold miner Resolute Mining was the top gainer on the benchmark and closed 10.3% higher.
Heavyweight “big four” banks lost between 0.7% and 1.4%.
Australia’s largest building materials maker Boral and educational services provider G8 Education led declines on the index, as both flagged weaker annual profit outlook.
New Zealand’s benchmark S&P/NZX 50 index closed 1.3% lower at 10,483.47.
Dairy products firm Fonterra Shareholders’ Fund led falls on the index, after having lost 4.5% on the day.
Reporting by Devika Syamnath in Bengaluru; Editing by Kim Coghill