Australian shares fell on Tuesday, dragged by heavyweight mining and energy stocks on the back of falling commodity prices, while the central bank kept the country's cash rate unchanged despite maintaining a cautious outlook.

The S&P/ASX 200 index ended 0.9% lower at 7,061.60 points. The benchmark had closed 0.7% higher on Monday.

The Reserve Bank of Australia (RBA) held interest rates at 4.35% at its policy meeting during the day, in line with market expectations, but remained open to future rate hikes.

However, last week's weak inflation data seems to have tempered the RBA's tightening bias, reducing the chances of further rate hikes.

"The prospect of further hikes remains more conditional, rather than an explicit bias. Indeed, on the dovish side, the RBA gave more weight to the 'lags of policy'," analysts at UBS wrote.

In Sydney, the mining sub-index led losses, dropping 1.9%, their biggest intraday decline in nearly six weeks, as iron ore prices lost ground on production restrictions in northern China.

Mining giants BHP and Fortescue lost 1.3% and 0.9%, respectively. The world's largest iron-ore miner, Rio Tinto, ended the day 1% lower.

Energy stocks declined 2.1%, adding to the benchmark losses, as oil prices continued to reflect the uncertainty over voluntary output cuts by OPEC+.

Financials lost 0.2% with Commonwealth Bank of Australia, the country's largest bank, dropping 0.4%. Financial conglomerate Macquarie Group ended the day 0.7% lower whereas small-cap lender Bank of Queensland dragged 3.2% on the benchmark.

Gold stocks fell 3.1%, after hitting a near seven-month high on Monday, with top gold miner Northern Star Resources dropping 4%.

Among individual stocks, the country's largest power retailer, Origin Energy , which snubbed a $10.6 billion takeover bid on Monday, was one of the top gainers, adding 2.2%.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index fell 1% to finish the session at 11,356.99 points. (Reporting by Aaditya Govind Rao in Bengaluru; Editing by Mrigank Dhaniwala)