http://nz.biz.yahoo.com//090701/16/d4xq.html

(Adds analyst comment)

By Mette Fraende and Denny Thomas

SYDNEY, July 1 (Reuters) - Australian shares fell 2.1 percent on Wednesday as soft economic indicators around the world put pressure on growth-sensitive stocks such as top miner BHP Billiton (ASX: BHP.ax) , while the banks also struggled.

A fall in U.S. consumer confidence and a softer-than-expected Japanese tankan survey of business sentiment put investors in a more cautious mood, after the Australian market had jumped to a two-week closing high the previous session.

The benchmark S&P/ASX 200 .AXJO lost 80.9 points to 3,874.0, based on the latest available data.

New Zealand's benchmark NZX 50 index .NZ50 fell 0.6 percent to 2,780.4 points.

"There was a very weak lead from the U.S., so from the open our market was under pressure. A lot of the weakness globally, in the U.S. and Europe overnight, was related to commodities stocks," said Shane Oliver, head of investment strategy at AMP Capital Investors.

BHP, the world's top miner, recovered some of its earlier losses, but still ended down 2.4 percent at A$33.90.

Fellow miner Rio Tinto Ltd (ASX: RIO.ax) ended off 1.2 percent at A$51.60, having fallen as far as A$50.66 earlier in the day.

Reports that China was softening its stance on iron ore negotiations helped spark a revival, with Rio also helped after a source told Reuters that Chinalco was likely to participate in its $15.2 billion rights offer. [ID:nPEK146964] [ID:nSYD518726].

Australia's top four banks also came under pressure, led by No.1 lender National Australia Bank (ASX: NAB.ax) , down 3.3 percent to A$21.69, and No.2 lender Westpac Banking Corp. (ASX: WBC.ax) , down 2.8 percent to A$19.68.

Third-largest lender Commonwealth Bank (ASX: CBA.ax) fell 2.3 percent to A$30.09 and Australia and New Zealand Banking Group (ASX: ANZ.ax) lost 1.5 percent to A$16.25.

"It was a general worry about the economic recovery driving that. Banks in the U.S. were down quite a bit as well," Oliver said.

Domestic economic data was mixed, with May retail sales rising 1 percent, which was double market forecasts, but May building approvals showing a surprisingly sharp 12.5 percent drop. [nSP479300].

However, the top retailers failed to gain much traction, having already risen strongly the previous session after a profit upgrade from David Jones Ltd (ASX: DJS.ax) . David Jones lost 2.2 percent to A$4.45 on Wednesday.

Global recovery doubts helped drive down shares in Westfield Group (ASX: WDC.ax) , the world's biggest shopping mall owner by market value. It fell 3.7 percent to A$10.96. About half of Westfield's retail outlets are in the United States. (Reporting by Mette Fraende; Editing by James Thornhill)