Australian shares fell on Monday, after a seven-session rally, dragged down by a sell-off in banking stocks, with the country's oldest lender Westpac leading the decline after missing first-half profit expectations.

The S&P/ASX 200 index fell 0.2 percent to 8,218 points by midday trading. The benchmark had gained 1.1 percent on Friday.

Heavyweight financials weighed the most on the benchmark, sliding as much as 1.5 percent. The sub-index is set for its weakest session since April 11.

Westpac fell more than 2 percent after the country's number 2 mortgage lender's first-half profit missed market estimates as the loan spreads narrowed and the bank cautioned that evolving global trade policies were making it harder to secure financing.

The rest of the "Big Four" banks fell between 0.2 percent and 2.2 percent.

Domestic investors looked forward to the major banks' earnings reports this week to understand how US President Donald Trump's tariffs have impacted the local financial sector.

The National Australia Bank and ANZ Group will announce their half-year results on May 7 and May 8, respectively. The Commonwealth Bank of Australia, the country's largest lender, will report its third-quarter trading update on May 14.

Energy stocks added to the benchmark's decline, dropping 1.9 percent, dragged down by a slump in oil prices.

New Zealand's benchmark S&P/NZX 50 index gained 0.3 percent to 12,365 points. (Reuters)