Australia shares pinned by banking sector as govt inquiry begins; NZ down

* Aussie shares close at lowest since mid-Oct

* Miners trim financials-led losses

* NZ falls for 5th straight session (Updates to close)

Feb 12 (Reuters) - Australian shares lost 0.3 percent on Monday, dragged down by financials as a government-led inquiry into the scandal-hit banking sector's selling tactics got underway.

The benchmark S&P/ASX 200 index .AXJO recovered some losses to finish the session 0.3 percent or 17.3 points lower at 5,820.7 - its weakest close since October 13. It slipped 0.9 percent on Friday.

Investors are also watching out for U.S. January inflation data due later in the week as it comes amid a backdrop of growing anxiety in markets which have been roiled by the prospect of higher prices and interest rates.

On Wall Street, the S&P 500 Index recorded its worst week in two years. .N

In Sydney, the market was pinned down by the 'Big Four' banks, falling between 0.5 to 0.8 percent. Westpac Banking Corp WBC.AX and Australia and New Zealand Banking Group ANZ.AX declined 0.7 percent each for their weakest close since June 2017.

The losses came as a government-backed inquiry into Australia's finance sector on Monday said it will start its year-long investigation by scrutinising the selling tactics of banks' most lucrative products - mortgages. banking sector has been rocked by scandals including interest rate rigging and alleged money laundering. The Royal Commission's final recommendations could lead to criminal or civil prosecutions as well as greater regulation, just as the banks are dealing with a revenue crunch following years of record profits. retailer JB Hi-Fi JBH.AX was the biggest loser on the index with an 8 percent drop. The company posted a record first-half profit, but warned that earnings growth would slow amid fierce competition. stocks helped cushion the index's fall, supported by a recovery in oil and copper prices. O/R MET/L

BHP Billiton (LON:BLT) BHP.AX and Rio Tinto (LON:RIO) RIO.AX rose 1.5 percent each, while South32 Ltd S32.AX climbed 2.7 percent.

New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.4 percent or 33.31 points to finish the session at 8,059.06, its lowest close since mid-November.

It was the fifth straight session of losses for the index, led by declines for healthcare and industrial stocks.

Fisher & Paykel Healthcare Corporation Ltd FPH.NZ slipped 2.1 percent to close at its weakest level since Sept. 20, 2017, while Ryman Healthcare Ltd RYM.NZ dropped 1.9 percent.

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