Australian, NZ shares buckle under trade war strain

* Mining, energy units lead losses on ASX

* Lynas shares hit highest in over 5-years

* NZ's Fonterra at record low as dry weather hit NZ milk output

By Devika Syamnath

May 30 (Reuters) - Australian shares tracked a global selloff on Thursday, with mining stocks leading the losses, eroding part of last week's rally as the drawn-out Sino-U.S. trade war weighed on investor sentiment.

The S&P/ASX 200 index .AXJO was 0.7%, or 45.4 points, lower at 6,394.6. The benchmark has lost over 1% since it scaled an 11-year high on Wednesday and the lack of any positive drivers out of the U.S.-Sino trade war saga has only fuelled risk-averse selling.

"The rally has well and truly run out of steam on a technical basis and on a fundamental basis," said James McGlew, Executive director of corporate stockbroking at Argonaut.

"Markets can price risk well but they can't price uncertainty ... the uncertainty is driving sellers to have the upper hand today."

Additionally, Fitch Ratings said despite positive commodity prices, it expects Australia's 2019 gross domestic product growth to hit its lowest since the 2008-2009 global financial crisis. in global commodity prices on Thursday hit local mining .AXMM and energy stocks .AXEJ , sending both about 1% lower.

Mining major Rio Tinto (LON:RIO) Ltd RIO.AX fell as much as 2.5%, while the world's biggest miner BHP Group Ltd BHP.AX also dipped 1.1%.

Oil and gas heavyweights Santos STO.AX and Woodside Petroleum WPL.AX lost 1.7% and 1%, respectively.

Even gold stocks .AXJO , typically considered a safe investment in times of turmoil, gave up earlier gains to fall as much as 0.4%. Evolution Mining Ltd EVN.AX lost as much as 0.8%.

However, rare earths miner Lynas Corporation Ltd LYC.AX bucked the wider trend to gain for a fourth session and touch its best level in over five years.

McGlew said Lynas and other rare earth firms such as Northern Minerals Ltd NTU.AX and Peak Resources Ltd PEK.AX stand to gain after opinion pieces in Chinese media warned Washington a ban on Huawei could result in tightened access to China's rare earths. Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.3% to 10,067.30 by 0156 GMT.

Dairy group Fonterra FCG.NZ FSF.NZ said its New Zealand milk production fell 10% in April from the year before as dry weather hit farms. of Fonterra on Thursday traded as much as 2.5% lower to touch a record low, on track for their third consecutive session of losses.

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