Australian shares fall as banks drag amid inquiry; NZ slips

* Aussie shares down as much as 0.9 pct

* Banks drag as inquiry into sector rolls on

* NZ shares snap 4 sessions of gains

By Chris Thomas

March 14 (Reuters) - Australian shares fell on Wednesday,with losses dominated by banking stocks amid an inquiry into thescandal-ridden sector, while the departure of yet another seniorofficial from the Trump administration further soured sentiment.

The S&P/ASX 200 index fell 0.7 percent or 43.9points to 5,930.8 by 0027 GMT. The benchmark fell 0.4 percent onTuesday.

Financial stocks logged the biggest share of losses afterthe first day of the government-backed inquiry heard NationalAustralia Bank Ltd issued almost $19 billion in homeloans under a scheme involving falsified documents.

Shares of NAB fell as much as 1.4 percent, while others inthe "Big Four" dropped between 0.9 and 1.2 percent.

"The headlines coming out of the first day of the RoyalCommission haven't been all that kind to the banking sector, soits not a surprise that banks are off a little bit," said DamienHennessy, co-founder of Heuristic Investment Systems.

Commonwealth Bank of Australia executives will bequestioned later this week about fraudulent broker arrangementsand loan applications.

Trump's firing of U.S. Secretary of State Rex Tillerson didnot do a lot for investor confidence either, Hennessy noted.

Major U.S. indexes fell overnight as Tillerson's dismissaland the possibility of additional U.S. import tariffs againstChina dragged down stocks across multiple sectors.

Australian healthcare giant CSL Ltd retreated fromrecent record highs to drop 1.3 percent.

Telecom stock Telstra Corp was among the top dragson the index, marking its sharpest intraday fall in two weekswith a 2.4 percent drop.

Weak commodity prices kept materials stocks in the red, withthe world's No.1 miner BHP Billiton down 0.8 percent.

Oil prices fell more than 1 percent on concerns over risingU.S. production, while huge iron ore stockpiles in China sentChinese iron ore futures to near their weakest level sinceNovember.

New Zealand's benchmark S&P/NZX 50 index snappedfour straight sessions of gains to fall as much as 0.6 percent.

Sky Network Television Ltd was the top loser on theindex, plunging 8 percent to a record low.

Telecom company Spark New Zealand fell as much as2.2 percent, while a2 Milk Company slipped 1.9 percent.

The country posted a wider-than-expected current accountdeficit in the fourth quarter on the back of aircraft importsand robust earnings by foreign firms on local investments,official data showed.(Reporting by Chris Thomas in BengaluruEditing by Eric Meijer)