Australian shares on Friday posted a third weekly loss and their worst month in three, as concerns over a potential global recession sapped risk appetite after the U.S. Federal Reserve reiterated its aggressive stance to tackle inflation.

The S&P/ASX 200 index closed 1.2% lower on Friday. The benchmark ended 1.4% higher in the previous day.

Worries emerged after U.S. central bank officials overnight said they will continue raising borrowing rates to arrest price pressures, even as recession worries and turmoil in global markets lingered.

Central banks from Australia and New Zealand are also set to raise their key policy rates by 50 basis points each in their October meetings in an attempt to tame red-hot inflation.

"We also expect the RBA to 'soften' its message by removing the reference to "over the months ahead" in the context of further rate increases," analysts from ANZ Research said.

Financials led the laggards for the day, losing about 2.3% and for a seventh straight week, with the country's largest banks falling between 2% and 3%.

"The (bank) index has been losing so much because investors are probably digesting the fact that elevated rates are likely to stay here, and it will be immature to call the terminal rate at this time," said Kunal Sawhney, chief executive officer at Kalkine Group.

Technology stocks slipped 2.7% and marked their third weekly loss. Accounting service provider Xero and ASX-listed shares of Block Inc slid 4.3% and 4.8%, respectively.

Commodities provided some respite to an otherwise gloomy benchmark, with miners climbing about 0.8%, as top steel producer China reported a ramp-up in its output due to rising construction demand.

Rio Tinto, BHP Group and Fortescue Metals rose between 0.1% and 2.8%.

Gold stocks also supported the resource-rich bourse with a 3.5% jump. Newcrest Mining and Northern Star Resources advanced 2.7% and 4.3%, respectively.


New Zealand's benchmark S&P/NZX 50 index fell 1.2% finish the session at 11,065.7 points. (Reporting by Archishma Iyer in Bengaluru; Editing by Sherry Jacob-Phillips)