Australian shares fell on Tuesday as a broad sell-off due to the widening Middle East conflict hit markets, though a rebound in bank stocks helped limit losses. The S&P/ASX 200 index fell 0.4% to 9,162.1 by 2336 GMT. The benchmark closed flat on Monday. Markets turned risk-off as the widening US-Israeli conflict with Iran heightened global volatility and concerns over economic and financial impacts. Gold stocks dropped 3.2% after attaining record high levels in the previous session. The broader mining sub-index fell 1.2%. Evolution Mining eased 2.8%, while Northern Star Resources dropped 3.2%. The consumer discretionary sub-index dropped 1%, while staples fell 0.4%. Healthcare stocks eased 0.5%. Meanwhile, the Reserve Bank of Australia’s Governor Michele Bullock said an interest rate hike was possible this month if it was decided that inflation expectations were at risk of becoming unanchored. Bullock also cautioned that if a rise in global energy prices was prolonged, it could weigh on consumer demand and economic growth, putting upward pressure on inflation. Rate-sensitive financials stabilised, gaining 0.4%, after posting their worst session since November 18 on Monday. Top business lender National Australia Bank rose 1.1% to lead the “big four” lenders. ANZ rose 0.9%. Energy stocks rose 0.2%, after briefly reaching their highest levels since July 2024 earlier in the session, as oil and gas prices surged due to facility shutdowns and disrupted shipping routes in the Middle East. Woodside Energy gained 0.3%, while Santos edged up 0.1%. Technology stocks rose more than 1%, tracking Wall Street peers, as appetite for artificial intelligence-focused shares grew. WiseTech Global rose as much as 2.9%. Local shares of Life360 surged 3.2% after its fourth-quarter revenue beat estimates. In New Zealand, the benchmark S&P/NZX 50 index fell 0.2% to 13,626.91.