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By Roushni Nair

March 13 - Australian shares confirmed a correction on Thursday after an early rally lost steam, dragged by consumer and banking stocks on concerns over domestic inflation and the ongoing tariff issues under U.S. President Donald Trump.

The S&P/ASX 200 index .AXJO closed 0.5% lower at 7,749.1. The benchmark dropped 10.1% from its record peak on February 14, which is commonly known as a market correction, marking its fifteenth loss in the last 19 sessions.

Since its all-time high, Australian shares have slumped sharply, driven largely by major banks.

Meanwhile, in response to U.S. tariffs on steel and aluminium, Prime Minister Anthony Albanese stated on Wednesday that Australia would not impose reciprocal tariffs after Trump ruled out exemptions.

Leading the session's losses, financials .AXFJ declined 0.7%, with Australia's "Big Four" banks slipping between 0.5% and 1.5%.

Consumer staple .AXSJ and discretionary companies .AXDJ fell 1% and 0.7%, respectively, with the latter clocking its largest intra-day drop in over a week.

Australia's consumer inflation expectations for the next 12 months dropped to 3.6% in March from 4.6% in February, according to LSEG data, indicating potential slower price growth, which could affect revenue for consumer sector companies.

With interest rates held steady and widespread mortgage stress, the upcoming election could lead to consumer spending hesitance despite little differentiation between parties, said Henry Jennings, senior analyst at Marcustoday Financial Newsletter.

The 2025 Australian federal election will be held on or before May 17.

The energy sub-index .AXEJ fell 0.5%, as coal miners were under pressure from a 3% drop in coking coal prices and Macquarie lowered coal price forecast amid weak demand.

New Hope Corp NHC.AX fell 8.6%, while Whitehaven Coal WHC.AX dropped 5.8% in its worst session in six months.

Yancoal Australia YAL.AX and Poultry producer Inghams ING.AX, which went ex-dividend, plunged 12.6% and 7.3%, respectively.

Meanwhile, New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.3% to 12,209.1.

(Reporting by Roushni Nair in Bengaluru; Editing by Rashmi Aich)

((Roushni.Nair@thomsonreuters.com;))

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