Australian shares hit about 6-week low on worries of Fed rate hikes

* Mining index end 2.7% lower

* US July retail sales rise more than expected

* NZ central bank sees cash rate on hold until 2025

Aug 16 (Reuters) - Australian shares marked their worst day in about six-weeks on Wednesday after stronger-than-expected US retail sales data caused investors to worry that higher rates could stay for longer, sparking a global sell-off.

The S&P/ASX 200 index lost 1.5% to 7195.20 points, its worst since July 7. The benchmark gained 0.4% on Tuesday. The US Commerce Department report showed retail sales grew 0.7% last month against expectations of a 0.4% rise, suggesting the U.S. economy remains strong.

"I think the negative sentiment on Aussie equities are a result of explosive US retail sales data last night," said Glenn Yin, Head of Research and Analysis at AETOS Capital Group.

While China's soft July activity data already weighed on the sentiment, investors now fret whether the Federal Reserve might consider the retail sales data as an indicator to continue raising rates.

"The data increased the odds for the Fed to keep rates at high levels for longer and offered strength to the greenback, pressing on riskier currencies, typically the Australian dollar and the New Zealand dollar," said Tina Teng, Markets Analyst, CMC Markets APAC & Canada, in a Wednesday note.

On the local bourse, heavy-weight mining index .AXMM fell 2.7%. Financials also slipped nearly 1.7% .AXFJ posting their worst day since for biggest losses since May 31. The "big four" banks slid between 0.9% and 3.7%.

New Zealand's benchmark S&P/NZX 50 index skidded 0.488% to 11,763.11.

The country's central bank held the cash rate steady at 5.5% on Wednesday, in line with expectations from 29 economists in a Reuters poll.

A front-runner in withdrawing pandemic-era stimulus among its peers, the Reserve Bank of New Zealand (RBNZ) has battled to curb inflation, lifting rates by 525 basis points since October 2021 in the most aggressive tightening since the official cash rate was introduced in 1999.

(Reporting by Aishwarya Nair in Bengaluru; Editing by Nivedita Bhattacharjee)