Australia shares ease on rate cut doubts, weak commody prices

* CPI (Other OTC: CPICQ - news) weak, but maybe not weak enough for a rate cut

* Iron ore, oil prices hitting resources

* Benchmark loses a month of gains (Adds analysis, quotes, stocks on the move)

SYDNEY/WELLINGTON, April 22 (Reuters) - Australian shares fell on Wednesday as investors harboured doubts over whether the latest round of economic data would convince the Reserve Bank of Australia to cut rates, while continuing weakness in commodity prices dragged at resources.

Consumer prices rose their slowest in nearly three years in the March quarter, official data showed, but traders were unsure whether it would trigger a rate cut since inflation still appeared to be in the reserve's target 2-3 percent range.

"There's no doubt (the data) is dragging on the ASX," said IG Markets strategist Evan Lucas.

"But it gives (the Reserve Bank) scope to hold off. They're going to cut, but it just gives them more scope for one more month. The stockmarket has taken that idea and run with it."

The S&P/ASX 200 index followed Wall St to open about half a percentage lower before sliding further after the inflation data was released mid-morning.

By 0228 GMT, the benchmark was off by 45.8 points or 0.8 percent at 5826.5. It has fallen for seven of the last 10 sessions and has lost 2 percent in the past month.

Yield-heavy bank stocks tumbled as investors bet on better returns from bonds since rates may stay on hold another month. Westpac Banking Corp and National Australia Bank were down about 1.5 percent while Commonwealth Bank of Australia and Australia and New Zealand Banking Group dipped 1 percent.

Insurers suffered as they start to assess their exposure to the biggest storm to hit New South Wales state in two decades, with Suncorp Group and Insurance Australia Group both down about 1.5 percent.

Iron ore miner BHP Billiton (NYSE: BBL - news) tumbled 1.9 percent after it delayed extra production, with the iron ore spot price anchored around 10-year lows.

Rio Tinto (Xetra: 855018 - news) was down 1.7 percent.

Energy stocks also fell in step with the oil price. Origin Energy, Santos and Oil Search each dipped around 2 percent.

New Zealand shares fell for a fourth consecutive session, sending the benchmark NZX50 index down 0.4 percent to 5,795.16, the lowest since late February.

Most large stocks lost ground, with the exception of market leader Fletcher Building (NZSE: FBU.NZ - news) , up 0.5 percent as demand lifted it off a three-month low.

Meridian Energy fell a further 2.1 percent with investors selling ahead of next month's final payment on the part-paid shares.

Telecoms network operator Chorus was knocked 2 percent as investors took profits from a rally the previous session.

(Editing by Simon Cameron-Moore)