Australian shares fall a second day as sentiment cools

The energy sector was the biggest gainer in trading, while consumer staples have fallen the most. (Steven Saphore/AAP PHOTOS)

The New Year's hangover for the local bourse is lingering, with shares falling for a second day amid more conflict in the Middle East and questions about the aggressive US rate cuts many commentators expect this year.

The benchmark S&P/ASX200 index on Thursday finished down 29.1 points, or 0.39 per cent, to 7,494.1, after dropping 1.37 per cent on Wednesday.