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Australia shares hit over 2-month low as tensions with China mount

* Benchmark set for fourth straight weekly decline

* Rio Tinto CEO steps down, shares fall up to 1.5%

* NZ bourse on track for second weekly loss

Sept 11 (Reuters) - Australian shares fell 1% on Friday and were on track to post their fourth straight weekly decline, on rising geopolitical tensions with China, the country’s biggest trading partner, and uncertainty over the easing of coronavirus-led curbs.

The S&P/ASX 200 index was down 1% to 5,849.6 by 0030 GMT and was on track to post a weekly loss of 1.3%, which would mark its fourth consecutive week in the red. The index fell as much as 1.2% to 5,836.2, its lowest since June 30.

China said Australia’s embassy in China obstructed law enforcement when it sheltered two journalists who were wanted for questioning in the country and returned to Australia this week.

Mining stocks, which are heavily-reliant on exports to China, fell 1.6%, and were the top drags on the index. An overnight decline in iron ore futures also added to the sector’s woes.

Also weighing on sentiment, Australia’s conservative government clashed with state lawmakers on Thursday over how fast to relax social distancing restrictions, as the number of new COVID-19 cases showed a steady decline.

Victoria, which now accounts for about 75% of the country’s infections, reported 43 new cases on Friday, down from 51 a day earlier.

Among stocks, global miner Rio Tinto fell as much as 1.5% after its chief executive stepped down following mounting dissatisfaction over the findings of an internal review regarding legal destruction of an indigenous heritage site in Western Australia.

In New Zealand, the benchmark S&P/NZX 50 index slipped 0.8% to 11,716.05 after a survey showed New Zealand’s manufacturing activity dropped during August owing to a lockdown in Auckland due to a second wave of coronavirus infections.

The index was set for a second straight weekly decline.

Blue-chip firms were among the top drags, with Fisher & Paykel Healthcare losing about 4.5% and hitting its lowest since June 26.

Reporting by Sameer Manekar in Bengaluru; Editing by Amy Caren Daniel

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