* Tech sector sees worst day since March 2020
* Humm Group's BNPL business receives buyout offer
* Banks drop 2.3%
Jan 6 (Reuters) - Australian shares posted their biggest drop since September 2020 on Thursday, after the minutes of a U.S. Federal Reserve policy meeting signalled an earlier-than-anticipated rate hike, sharply hitting technology sector stocks.
The S&P/ASX 200 index closed 2.7% down at 7,358.3, after plunging 3% earlier, with all sectors ending in the red. It had shed 0.3% on Wednesday.
Australian markets joined a global sell-off after Fed policymakers said at their December meeting that concerns over hot inflation could prompt them to raise rates sooner than expected and trim overall asset holdings.
Leading losses on the benchmark, technology stocks tumbled 6.4% to hit their lowest in seven months, tracking a 3.3% drop overnight in Wall Street's tech-focused Nasdaq .
"The prospects of a sooner interest rate hike have hit tech stocks harder as higher rates could reduce the present value of tech companies' future profits," said Kunal Sawhney, chief executive of Kalkine Group.
Buy now, pay later (BNPL) firm Afterpay led declines on the tech subindex, sliding 10.8% after Block Inc , which agreed to buy the Australian firm last year, lost 8.2% overnight, losing market value by A$2.57 billion ($1.84 billion) in a day.
Xero Ltd and Wisetech Global also shed 6.5% and 6.9%, respectively.
In some positive news for the BNPL sector, Humm Group added 2.2% after digital payments firm Latitude Group Holdings Ltd offered to buy Humm's consumer unit for A$355 million.
Banks slipped 2.3%, with the country's "Big Four" lenders losing 1.4% to 3.1%.
The mining sector reversed early gains to close 1.3% lower, but major miners BHP Group and Rio Tinto advanced 0.1% and 0.7% respectively on strong iron ore prices.
In New Zealand, the benchmark S&P/NZX 50 index fell 1.3% to 12,983.01 in its worst session since late November. ($1 = 1.3947 Australian dollars) (Reporting by Harshita Swaminathan; Editing by Rashmi Aich)
