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Australia shares skid as energy firms selloff on oil plunge

* Oil stocks tumble after OPEC shuns output cuts

* Lower prices stoke concerns for Australian commodities exports

* Rio Tinto (Xetra: 855018 - news) bucks trend on capital return news (Adds analysis, quotes, stocks on the move)

SYDNEY/WELLINGTON, Nov 28 (Reuters) - Australian shares tumbled the most in seven-weeks on Friday, led by a punishing selloff in energy producers, as the biggest drop in oil prices in three years stoked concerns that demand for the country's commodities may decline over the long term.

Overnight, brent crude oil plunged more than $6 a barrel, the sharpest one-day fall since 2011, after OPEC decided not to cut production despite a huge oversupply in world markets.

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"We're looking at a scenario of lower commodity prices generally, led by oversupply and relatively muted demand growth," CMC Markets chief market analyst Ric Spooner said.

"There is a chance now that we will see lower oil prices for quite some time, even if they recover from here, and that what we're seeing is (share) prices adjust to that."

The S&P/ASX 200 index was down 1.4 percent or 75.6 points at 5325.3 by 0148 GMT, its biggest percentage drop since Oct. 10.

Santos led steep declines in oil majors, shedding 10 percent, while Oil Search dropped 7 percent, Woodside Petroleum (Other OTC: WOPEF - news) shed 6 percent and energy retailer-producer Origin Energy fell 6.3.

Diversified miner BHP Billiton (NYSE: BBL - news) also fell 3 percent. Rio Tinto bucked the broader market and rose nearly 2 percent, after promising to increase returns to shareholders when it reports full year results in February despite lower iron ore prices.

Banks were also down, albeit less sharply, with Wespac Banking Corp off 1.7 percent and Australia and New Zealand Banking Group 1.2 percent lower.

Investors in Qantas Airways cheered lower oil prices, sending the stock up 5 percent after the airline announced plans to up its investment in subsidiary Jetstar Japan's international operations.

New Zealand's benchmark NZX50 index was up 0.3 percent at 5,471.02 supported by steady demand for the market's two biggest stocks.

The market's biggest stock by capitalisation, Fletcher Building, was up 1.5 percent, having hit a 12-month low the previous session. The number two stock telecommunications company Spark was up 0.8 percent.

(Editing by Shri Navaratnam)