Feb 29 (Reuters) - Australian shares fell on Thursday, dragged down by losses in miners and banks, while investors globally awaited a key U.S. inflation report due later in the day for further clues on when the Federal Reserve is likely to begin cutting interest rates.

The S&P/ASX 200 index was down 0.2% at 7,642.700, as of 0012 GMT. The benchmark closed flat on Wednesday.

Heavyweight mining stocks were the top drags, declining 0.9% in what could be their fifth straight session of losses. BHP Group and Rio Tinto declined up to 1% each, while Fortescue shed as much as 2.2%.

Diversified miner South32 jumped as much as 5.3% and was on track for its biggest daily gain in nearly a year, after the company announced the divestment of its flagship Illawarra metallurgical coal project in New South Wales for $1.65 billion. The stock was among the top 10 gainers in the benchmark index.

Meanwhile, investors globally awaited the Fed's preferred inflation measure for further direction after a slew of strong data, including inflation, prompted them to pare back interest rate cut expectations for this year. A soft inflation report could reinforce expectations of an early Fed rate cut.

Back in Sydney, banks slipped 0.4%, with Suncorp Group losing 2.7%, while Commonwealth Bank of Australia shed 0.4%.

Energy stocks shed up to 0.6% after crude oil prices settled lower overnight as the Fed held firm on its decision to hold off cutting interest rates in the near future.

Woodside Energy and Paladin Energy were among the top losers, losing about 0.3% each.

In New Zealand, the benchmark S&P/NZX 50 index lost 0.6% to 11,696.68, a day after the central bank held its cash rate steady at 5.5%.

The Reserve Bank of New Zealand reiterated the need to keep policy restrictive for a while to bring inflation below the top-end of its 1%-3% target band.

(Reporting by Rajasik Mukherjee in Bengaluru; Editing by Subhranshu Sahu)