Australia shares slip on Wall St, selling tempered by RBA rates comment

(Adds analysis, quotes, stocks on the move)

SYDNEY, Nov 8 (Reuters) - A poor session on Wall Street pushed Australian shares 0.4 percent lower on Friday morning, but the downside was tempered after Australia's central bank kept the door open to further interest rate cuts.

Major U.S. indexes ended lower overnight with the S&P 500 suffering its worst daily decline since August, dampening the mood.

However, the market clawed back some losses as investors cheered the Reserve Bank of Australia (RBA), which said it had "not closed off the possibility" of further cuts in rates. The RBA also trimmed its forecasts for economic growth for the next two years in its quarterly report.

The S&P/ASX 200 index fell 23.4 points to 5,398.6 by 0126 GMT. The benchmark dropped 0.2 percent on Thursday and is set to give up 0.2 percent for the week, snapping four weeks of consecutive gains.

Westpac Banking Corp traded ex-dividend, losing 2.7 percent and dragging on the index for a second day. The Commonwealth Bank of Australia (Other OTC: CBAUF - news) added 0.1 percent to touch a record high of A$79.88, while Australia and New Zealand Banking Group rose 0.6 percent.

"CBA is at nearly A$80, that is absolutely astonishing, I think there's still growth there so the banks are doing well," said Michael Heffernan, senior client adviser and economist from broker Lonsec.

Mining (LSE: MIR.L - news) companies also lost ground after metals sank under the weight of a strong dollar following better-than-expected U.S. growth data and a surprise European Central Bank rate cut.

Bluechips BHP Billiton Ltd and Rio Tinto Ltd (Xetra: 855018 - news) lost 1.2 percent and 1 percent respectively. Elsewhere, Iluka Resources Ltd (Other OTC: ILKAF - news) fell 0.6 percent and OZ Minerals (Munich: OXR.MU - news) Ltd slipped 0.3 percent.

The Australian market has traded sideways in November, with the benchmark hovering at the 5,400 point level. A strong earnings season, particularly led by banks, and a recovering economy have driven a rally in the Australian market, although uncertainty over the Fed's stimulus has checked demand recently.

"If you're taking a medium term outlook, I think the market is looking good indeed," Heffernan said.

"You're going to get daily fluctuations along the way, but there's no fundamental reason why the market is going to retrace its steps."

Meanwhile, Echo Entertainment Group Ltd tumbled 7.1 percent to an all-time low of A$2.37 after the company said subdued consumer spending is continuing to impact on its revenue growth.

New Zealand's benchmark NZX 50 index rose 0.1 percent to 4,927.8.

(Reporting by Thuy Ong; Editing by Shri Navaratnam)