Australia shares recoil, dragged by banks

(Adds analysis, quotes, stocks on the move)

By Pauline Askin and Naomi Tajitsu

SYDNEY/WELLINGTON, May 27 Reuters) - Australian shares fell on Wednesday amid a broad sell off led by heavy weight banks and mining stocks following a negative lead from Wall Street.

The S&P/ASX 200 index fell 0.8 percent, or 46.0 points to 5,727.4 by 0316 GMT, retreating from a three-week peak set in the previous session.

National Australia Bank fell 1.3 percent while Commonwealth Bank slipped 0.9 percent. Among the miners, Rio Tinto (Xetra: 855018 - news) was down 1.7 percent.

"There is a lot of scepticism in investors minds at the moment," said Stan Shamu, Market Strategist, IG (LSE: IGG.L - news) . "No one's got that conviction that the recent trend of gains will necessarily continue."

U.S. stocks fell on Tuesday, pushing the S&P 500 to its biggest decline in three weeks, weighed down by concerns about Greece and data that fuelled expectations that a U.S. rate hike could come sooner rather than later.

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New Zealand's benchmark NZX50 index slipped 31.1 points or 0.5 percent to 5,764.8, tracking global share markets lower as a rise in risk aversion prompted investors to sell shares in the country's biggest companies.

Telecommunications retailer Spark fell 2.6 percent, while construction materials maker Fletcher Building (NZSE: FBU.NZ - news) fell 0.6 percent, reversing the previous day's gains.

Air New Zealand fell 1 percent to NZ$2.93, after its failure to push above a near eight-year high of NZ$2.97 prompted investors to book profits on its recent gains.

Metro Performance Glass fell 4.4 percent to a two-month low of NZ$1.76 after the glass maker anticipated challenges meeting its revenue target in the second half of the year, after first-half profits came in slightly above company forecasts.

A rare bright spot was Mainfreight which rose 0.6 percent after the transport services company reported a rise in full-year profit and added that it expected improved results in the coming year. (Editing by Simon Cameron-Moore)