Australian shares closed lower on Monday as mining stocks dropped after China brought back some COVID-19 curbs in Beijing, although expectations of higher interest rates supported banks.

The S&P/ASX 200 index, which rose as much as 0.3%, reversed course to end 12.5 points or 0.2% lower at 7,139.3.

Over the weekend, China reimposed some COVID-19 restrictions, with Beijing's most populous district urging residents to stay home over the weekend and on Monday, days after the country had eased some quarantine restrictions.

"Every time there's some positivity or optimism coming out of China reopening, it just gets shut down by more COVID-19 cases," said Azeem Sheriff, a market analyst at CMC Markets.

Mining companies, which export iron ore to China, dropped 1.7%, with BHP Group down 2.3% to become the biggest drag on the benchmark and sector indices.

Other mining giants Fortescue Metals Group and Rio Tinto also lost 3.8% and 2.3% respectively.

Meanwhile, financial stocks rose, with the country's "Big Four" lenders gaining between 0.6% and 1.5% each.

CMC Markets' Sheriff said the sector was benefitting from ongoing themes of interest rates expected to remain higher for longer, which help banks' margins and earnings, as their most recent results reports have shown.

Among individual stocks, online property settlement firm PEXA Group lost 3% after its top shareholder Link Administration exited its holding.

New Zealand's benchmark S&P/NZX 50 index rose 0.5% or 59.79 points to finish the session at 11,440.4.

The country's central bank is expected to deliver its first-ever 75 basis point interest rate hike on Wednesday, according to a Reuters poll. (Reporting by Harshita Swaminathan; editing by Uttaresh.V)