Australian shares closed slightly lower on Monday, reversing course from near five-month highs earlier in the session, as profit-taking in financial stocks more than offset a rally in commodity-related stocks after China eased some COVID-19 curbs.

The S&P/ASX 200 index closed 0.2% or 11.7 points lower at 7,146.3. The index had risen as much as 0.54% to 7196.5, its highest level since June 7, earlier in the day.

The index was largely pressured by a 1% drop in financial stocks, with top lender Commonwealth Bank of Australia's 0.7% drop the biggest drag.

"(Banks and defensive stocks) have had a pretty good run but there is obviously some concern because maybe they got a little bit ahead of themselves in terms of the Federal Reserve and the pivot," said Henry Jennings, a senior analyst and portfolio manager at Marcustoday Financial Newsletter.

The benchmark index closed 2.8% higher on Friday, with banks rising 2.1%, amid a global rally after data showed U.S. October inflation hit its lowest since January, fuelling hopes that the Fed may turn less hawkish.

However, a central bank official has since put a damper on the optimism.

"I think there's just some profit-taking in some of those industries and maybe some of that money is heading towards the resource sector," Jennings added.

Local mining and energy stocks rose 3.7% and 0.9%, respectively, as China eased some COVID-19 curbs, boosting expectations of demand for commodities such as iron ore and oil.

Heavyweight miners BHP Group, Rio Tinto and Fortescue Metals Group finished 3.3% to 10.1% higher. Champion Iron topped the mining and benchmark indexes, rising 12.9%.

Agribusiness Elders Ltd plunged 22.9% and was the top loser on the index after it flagged headwinds to the season's harvest due to flooding from extreme rainfall.

In New Zealand, the benchmark S&P/NZX 50 index fell 0.7% or 79.79 points to 11,231.97. (Reporting by Harshita Swaminathan, additional reporting by Nausheen Thusoo; Editing by Savio D'Souza)