Australian shares slip as mining losses offset bank gains

Oct 23 (Reuters) - Australian shares dropped on Friday, as a decline in mining stocks on softer commodity prices outweighed gains in banks, while escalating Houthi attacks on Saudi Arabia fuelled risk-off sentiment.

The S&P/ASX 200 index .AXJO fell 0.4% to 8,762.80 by 0104 GMT. The benchmark is set for its first weekly drop in four weeks.

Tensions in the Gulf escalated with fighting between Saudi Arabia and Yemen's Houthis intensifying, raising worries about oil supply that took benchmark Brent crude prices to a five-month high. O/R

Heavyweight miners .AXMM are down over 7% so far this week, heading for their steepest weekly drop since mid-March. The sub-index slumped nearly 3% on the day, tracking softer iron ore and copper prices. MET/L IRONORE/

Major miner Rio Tinto RIO.AX announced that it will invest $1.9 billion to develop the Kangwinan bauxite project in Queensland, Australia, which would add 20 million tons of annual bauxite production to its Weipa bauxite operations. The company's shares dropped 2.5%.

Gold stocks .AXGD declined more than 4%, set for their steepest drop since late August, shadowing bullion prices. The sub-index is down nearly 9% so far this week, which is set to be its worst in over seven months. GOL/

Evolution Mining EVN.AX and Northern Star Resources NST.AX fell 2% and 2.2%, respectively.GOL/

Energy stocks .AXEJ fell 1.9% to a two-week low, with the sub-index on track for its steepest weekly drop since late June.

Santos STO.AX and Woodside Energy WDS.AX slipped 2.8% and 1.1%, respectively.

Technology stocks .AXIJ slid 1.5%, tracking Wall Street peers lower on renewed doubts over AI spending by tech firms. .N

Bucking the trend, financials .AXFJ gained 0.6%, set for their third straight session of gains. The "Big Four" banks were all up between 0.2% and 1.1%.

Meanwhile, Whitehaven Coal WHC.AX reported a near 22% rise in first-quarter coal production, beating the VA consensus estimate.

New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.2% to 13,720.77 points.