* Banks and materials the biggest drag
* Rally in health care and IT stocks keeps benchmark afloat
* Insurers lower as inquiry moves into insurance sector
* Health care stocks account for most of the losses in NZ
By Aditya Soni
Sept 10 (Reuters) - Australian shares were unchanged on Monday as losses in banks and materials, fuelled by a possible escalation in Sino-U.S. trade conflicts and increased likelihood of third rate hike by U.S. Federal Reserve were offset by a rally in health care and IT stocks.
The S&P/ASX 200 index rose 1.70 points to 6,145.50 by 0200 GMT. The benchmark fell 0.3 percent on Friday and was on track to snap seven consecutive sessions of losses.
U.S. job growth accelerated in August and wages notched their largest annual increase in more than nine years, the U.S. Labor Department said on Friday, virtually securing a third interest rate increase from the Federal Reserve this year.
Michael McCarthy, chief market strategist at CMC Markets said the job numbers had prompted markets to price in increased probability of a rate hike in December, which was weighing on local trade.
Banks, which have the heaviest weighting on the benchmark, underpinned the bearish trend on Monday.
Index heavyweight Westpac Banking Corp fell 0.8 percent to a two-week low, while National Australia Bank Ltd dropped 0.5 percent.
NAB shares were trading at their lowest since August 27. Earlier in the day the lender said it will not lift its variable mortgage rate as it tries to win public support following revelations of misconduct, and despite its three larger rivals hiking their own rates.
“We’re seeing financials stocks lower particularly ahead of the Royal Commission moving into the insurance sector over the course of this week, and insurers in particular are under pressure in early trading,” said McCarthy.
Shares of QBE Insurance Group Ltd and Suncorp Group Ltd were trading 0.8 percent and 0.5 percent lower, respectively, as a powerful Australian inquiry turned to the A$46 billion ($32.70 billion) insurance sector.
Meanwhile, a near one-percent fall in benchmark copper on the London Metal Exchange hit materials stocks, with mining companies bearing the brunt of the losses.
BHP slipped 0.5 percent to a more than four-month low, while its rival Rio Tinto Ltd dropped 1.3 percent.
But healthcare stocks rose 0.8 percent, capping the losses on the benchmark. The healthcare index posted its biggest weekly fall in more then seven years last week.
Drugmaker CSL Ltd firmed 0.6 percent, while bionic-ear maker Cochlear Ltd rose 0.5 percent.
Similarly, information technology stocks jumped 1.6 percent after recording a heavy drop last week.
Shares of Computershare Ltd rose 0.7 percent, while accounting software firm Xero Ltd surged 5 percent.
Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index slid 0.38 percent or 34.43 points to 9,060.96.
Health care stocks drove the fall, with Ryman Healthcare Ltd down 1.5 percent, while Fisher & Paykel Healthcare Corporation Ltd dropped 1 percent.
$1 = 1.4069 Australian dollars Reporting by Aditya Soni in Bengaluru; Additional reporting by Ambar Warrick Editing by Eric Meijer