Australian shares closed lower on Thursday, led by energy and mining stocks on tumbling commodity prices, as investors across the globe dumped equities after fresh troubles at Swiss lender Credit Suisse intensified fears of a banking sector turmoil.

The S&P/ASX 200 index finished 1.5% lower at 6,965.50, declining for the fourth session in five.

Risk sentiment soured as Credit Suisse troubles stoked more concerns about the banking sector after the collapse of three U.S. banks in the space of a week.

Market participants scrambled to weigh the impact of the latest developments ahead of the U.S. Federal Reserve policy meeting next week, which will set the tone for the Reserve Bank of Australia's (RBA) rates decision in April.

Analysts at UBS said the strong Australian employment data for February supported a case for rate hikes, but household cash flow crunch would lead the RBA to pause further tightening.

Australian energy stocks led losses on the benchmark with a 4.8% dive after crude oil prices slumped overnight.

Woodside Petroleum slid 5.3% and Worley dropped 5.8%.

Miners followed with a 3.4% fall. Mining giants BHP Group, Rio Tinto and Fortescue Metals lost between 3.5% and 4.6%.

BHP is potentially facing a 36 billion pound ($44 billion) lawsuit in London over Brazil's worst environmental disaster after the number of claimants more than tripled, their lawyers said on Wednesday.

Financials shed 1.4%, with the "Big Four" banks down between 0.4% and 2.3%.

Morgan Stanley analysts said there were modest direct risks to major Australian lenders from the Silicon Valley Bank fallout, but strong liquidity buffers would insulate the blow.

Gold stocks eked out a 0.5% gain amid increased demand for safe-haven bullion.

Among individual stocks, intellectual property services provider IPH Ltd slumped more than 10% after reporting a data breach in a portion of its IT systems.

Digital payments and lending firm Latitude Group Holdings also disclosed a cyber attack in which personal information of around 328,000 customers was stolen.

Across the Tasman sea, New Zealand's benchmark S&P/NZX 50 index gained 0.7% to 11,699.02. (Reporting by Savyata Mishra in Bengaluru; Editing by Subhranshu Sahu)