Australia shares fall 0.5 pct on soft data, Qantas slumps as business hits turbulence

(Adds analysis, quotes, stocks on the move)

SYDNEY, Feb 27 (Reuters) - Australian shares skidded 0.5 percent to its biggest one-day loss in three weeks on Thursday, hurt by an unexpectedly steep drop in business investment numbers and a sharp fall in Qantas Airways Ltd after the carrier posted a hefty first half loss.

Trading started off on a tentative footing amid escalating tensions in Ukraine which put renewed pressure on emerging market assets.

Shares of Qantas Airways (Frankfurt: 896435 - news) , facing its own struggles against stiff competition in domestic and international routes, tumbled 7.5 percent. The carrier said it plans to cut 15 percent of its workforce, sell older jets and reduce capital spending after reporting a large first half loss of A$252 million.

"What we're hearing is steps to return Qantas to a lower cost base and return to profitability, which is good for Qantas' share price in the medium term," said Julia Lee, equities analyst at Bell Direct, adding that the fixes would take time.

The S&P/ASX 200 index fell 24 points to 5,413.0 by 00145 GMT. The benchmark edged 0.1 percent higher on Wednesday.

Putting further pressure on the market was a surprisingly weak report on capital spending. The data showed Australian business investment fell a steep 5.2 percent last quarter, the biggest drop in over four years, while spending plans for 2014/15 came in under expectations in a blow to the economic outlook.

All 'Big Four' banks fell, with National Australia Bank slipping 0.6 percent and Commonwealth Bank of Australia (Other OTC: CBAUF - news) off 0.5 percent.

In the mining space, blue chips BHP Billiton Ltd and Rio Tinto Ltd (Xetra: 855018 - news) fell 0.3 percent and 0.4 percent, respectively, as copper slipped to a three-week low on worries about global demand for the metal.

The Australian market hit a 5-1/2 year high of 5,461.7 earlier this week, largely underpinned by a solid earnings season, especially in the large-cap miners, banks and other recent high performers.

Pockets of weakness, however, underscored a challenging business environment.

Transfield Services Ltd dived 9.1 percent despite reporting higher first half earnings, as it said no dividends would be paid for the second half and noted that activity is still subdued.

Nine Entertainment Co Holdings Ltd added a modest 0.2 percent after posting a 24.3 percent rise in its first-half underlying net profit on Thursday as the company reported results for the first time following its initial public offering in December.

New Zealand's benchmark NZX 50 index fell 0.5 percent or 24.4 points to 4,948.8.

(Reporting by Thuy Ong; Editing by)