* Energy index declines over 2 pct
* Healthscope top gainer after takeover proposal
* Benchmark on track to post 3rd straight session of losses
By Aby Jose Koilparambil
Oct 23 (Reuters) - Australian shares declined on Tuesday as combination of domestic and international political uncertainty dented financials to mining and energy stocks.
The S&P/ASX 200 index .AXJO fell 0.82 percent or 57.90 points to 5,856.50 by 0141 GMT, on track to post its third successive session of losses.
Concerns over Italy's budget, deadlock on Brexit negotiations as well as tensions between the West and Saudi Arabia over the killing of journalist Jamal Khashoggi in Turkey have dented global risk appetite over recent days risk-off sentiment has hurt the Australian dollar and in part weighed on some of the stocks.
"When Aussie dollar is on the downtrend, the global investors, who are the dominant players, sell out of the banks," said Mathan Somasundaram, chief market strategist at Blue Ocean Equities.
Not helping the mood was political uncertainty at home, as Australia's ruling Liberal National government suffered a disastrous by-election loss over the weekend, snatching away its one-seat majority. financial sector has been under huge selling pressure this year amid revelations of widespread misconduct in the industry in a high-profile public inquiry.
Given the intense scrutiny, the nation's top lenders are narrowing down their focus to bread-and-butter lending activity amid intense scrutiny from a powerful quasi-judicial inquiry into wrongdoings in the sector. Bank of Australia CBA.AX said it would sell its 80 percent stake in Indonesian life insurance business PT Commonwealth Life to Hong Kong billionaire Richard Li's FWD Group for A$426 million ($301.57 million).
CBA stock was down 0.8 percent with financials shedding as much as 1 percent. The rest of the 'Big Four' banks were down between 0.8 percent and 1.4 percent.
Global miners were also down, with BHP BHP.AX falling as much 1.2 percent and Rio Tinto (LON:RIO) Ltd RIO.AX off 0.5 percent. The resources sector has been hurt by worries about slowing growth in China - Australia biggest trading partner - as Beijing and Washington remain locked in a bitter trade dispute.
The drop was steepest in energy stocks as sentiment remained nervous in the run-up to U.S. sanctions against Iran's crude exports that start next month. Energy Ltd ORG.AX slumped 2.9 percent while Oil Search Ltd OSH.AX slipped 2.7 percent.
Hospital operator Healthscope Ltd HSO.AX offset some of the losses in the healthcare sector, jumping as much as 21.6 percent, after it received a takeover proposal from a consortium comprising of private equity firm BGH Capital and AustralianSuper. the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 fell about 1 percent or 82.62 points to 8,719.64, led by declines in consumer sector.
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