Australia & NZ shares subdued, weekly gains expected

(Adds analysis, quotes, stocks on the move)

By Cecile Lefort and Naomi Tajitsu

SYDNEY/WELLINGTON, Dec 5 (Reuters) - Australian and New Zealand shares fell on Friday, weighed by further losses in the resources sector, though they were still on track to post weekly gains.

The S&P/ASX 200 index was down 0.8 percent to 5324.9 by 01:46 GMT, following three sessions of gains, but was still up around 0.3 percent this week.

"There has been a lot of volatility which has kept resource stocks under pressure," said Kara Ordway, a market maker and trader at City Index, seeing some consolidation ahead of U.S non-farm payroll data due later on Friday.

Investors gave mining shares a wide berth amid worries about global demand for commodities such as iron ore. Rio Tinto (Xetra: 855018 - news) dropped 2.6 percent, followed by BHP Billiton (NYSE: BBL - news) 1.3 percent. Fortescue Metals (Hamburg: FVJ.HM - news) was the hardest-hit, slumping more than 4 percent.

Shares (Frankfurt: DI6.F - news) in Mount Gibson Iron Ltd dived 46 percent to A$0.22 after saying it will need to assess the outlook for iron ore prices before deciding whether to reopen some operations.

In contrast, industrial stocks rose 1 percent, with mining services firm Bradken Ltd up 27 percent to A$4.20 after it received a A$872 million ($731 million) takeover approach.

New Zealand's benchmark NZX50 index slipped 12.3 points or 0.2 percent to 5,510.41 in early trade as some investors booked profits on the index's 1.5 percent gain this week, its best weekly performance since late October.

Chorus eased 1.5 percent to NZ$2.62, but hovered near a lifetime high of NZ$2.75 hit earlier in the week after a regulatory proposal to ease telecom price controls were seen to be positive for the struggling network operator's operations.

OceanaGold (Other OTC: OGDCF - news) fell 1.2 percent to NZ$2.42 as the gold prospector tracked softer global prices for the precious metal.

Fonterra co-operative (NZSE: FCG.NZ - news) 's sharetrading fund edged up 0.3 percent to a one-week high of NZ$6.17 as a fall in global dairy prices were seen as reducing input costs for the world's largest dairy exporter.