March 7 (Reuters) - Australian shares fell on Friday as financial stocks declined, and were set for their third straight weekly drop, although Insignia Financial soared after receiving raised takeover offers.

The S&P/ASX 200 index .AXJO dropped 1.1% to 8,008.6 by 2345 GMT. The benchmark was set for a weekly loss of 2%.

Heavily weighted financials .AXFJ lost 2% and were on track to shed 4.2% this week. Top lender Commonwealth Bank of Australia $(CBA)$ CBA.AX slumped 2.9%, and smaller Westpac WBC.AX fell 2.2%.

Australian banks have faced criticism for their extremely high valuations, with CBA and the other lending majors trading at a significantly higher price-to-earnings ratios relative to its global peers.

Insignia Financial IFL.AX was an outlier, gaining up to 13.5% after the asset manager received a raised offer of A$3.34 billion ($2.12 billion) from Bain Capital and CC Capital.

Insignia, which manages some A$327 billion ($207.22 billion) in assets, hit its highest since August to be the benchmark's top gainer as the sweetened A$5 per share bid is higher than the A$4.60 offer it received previously.

Technology stocks .AXIJ lost 1.5%, in line with Wall Street's overnight decline, as technology-heavy Nasdaq confirmed that it has been in a correction since December. .N

Meanwhile, global stocks underwent a volatile trading week amid escalating trade tensions between major economies and significant policy shifts in Europe.

Back in Sydney, Miners .AXMM slipped 0.3% as commodity prices continued to weigh. MET/L IRONORE/

Healthcare .AXHJ and Real Estate stocks .AXRE. were also subject to sell-offs, shedding 0.9% and 1.3% respectively.

New Zealand's benchmark S&P/NZX 50 index .NZ50 dropped 0.4% to 12,379.33.

($1 = 1.5780 Australian dollars)

(Reporting by Nichiket Sunil in Bengaluru; Editing by Varun H K)

((Nichiket.Sunil@thomsonreuters.com;))

For more information on DIARIES & DATA: U.S. earnings diary  RESF/US   Wall Street Week Ahead   .N/O Global Economy Week Ahead DATA/ ................................................................ For latest top breaking news across all markets          NEWS1