Australian shares set for first weekly drop in six as Middle East conflict weighs

June 20 (Reuters) - Australian shares fell to a two-week low in early trade on Friday, poised to snap a five-week winning streak, as escalating Middle East tensions dampened investor sentiment and softer metal prices weighed on local miners.

The S&P/ASX 200 index was down 0.3% at 8,500 points, as of 0033 GMT. The benchmark has lost 0.6% so far this week, and on track for its first weekly decline in six weeks, if losses hold.

Globally, investors stayed risk-averse as tensions between Iran and Israel continued to escalate, with Israel targeting nuclear sites in Iran amid a persistent absence of a ceasefire between the two long-standing adversaries.

"With U.S. markets offline and no fresh news – other than speculation about the possibility of U.S. intervention – related to the potential war between Israel and Iran, risk was taken off the table," said Kyle Rodda, senior financial market analyst with capital.com.

Australian heavyweight miners lost 0.6%, hitting their lowest levels since April 17, as lower copper prices weighed on the metals sub-index.

Mining behemoth BHP Group fell 0.3% while iron ore miner Rio Tinto lost 1%.

For the week, miners have shed 4.5% so far, on track for their worst week since March 31.

The financials sub-index slipped 0.3%, with the 'Big Four' banks declining between 0.1% and 0.3%.

Energy stocks traded largely flat as investors assessed the potential impact of Middle East tensions on global oil supply. Despite the subdued session, the sector has advanced 5.3% so far this week and is on track for its fourth straight weekly gain.

Woodside Energy rose 0.7% while smaller rival Santos added 0.4%.

Information technology firms lost 0.2% and Australian health stocks shed 0.3%.

Markets in New Zealand were closed for a public holiday.

(Reporting by Rajasik Mukherjee in Bengaluru; Editing by Sherry Jacob-Phillips)