Australia shares fall for third day as metals, offshore markets sink

* Gold leads metals into negative territory

* Investors adjusting to tough bank capital rules

* Strong U.S. data raises chances of Fed rate hike (Adds analysis, quotes, stocks on the move)

SYDNEY/WELLINGTON, July 24 (Reuters) - Australian shares traded slightly lower on Friday, see-sawing in a tight range as weaker commodity prices and declines on most major overseas markets gave investors little reason to buy.

Resources companies posted the biggest losses on persistent weakness in the spot prices of oil, gold and other key metals, while financials stocks staged a mild recovery as investors grew more comfortable with tough new capital requirements for property investment loans.

The S&P/ASX 200 index edged briefly into positive territory in the morning session before backtracking to be down 2.8 points or less than 0.1 percent at 5587.1 by 0229 GMT, its third consecutive day of losses.

"The market is treading water. It's been a volatile week," said Steven Daghlian, a market analyst at Commonwealth Securities.

"The mining sector has been holding back the market and it continues with falls in commodities like oil and iron ore."

Gold producer Newcrest Mining was among the biggest losers, dropping 6.3 percent as the gold price held near a five-year low amid expectations that strong U.S. economic data will curb its safe-haven appeal.

Iron ore major BHP Billiton (NYSE: BBL - news) and rival Rio Tinto (LSE: RIO.L - news) each dipped 0.8 percent as the steel-making ingredient also faces downward pricing pressure due to concerns of sluggish demand from China.

Bank stocks fared better after months of heavy selling in anticipation of the changes in capital requirements for property investment loans.

Westpac Banking Corp was up 0.4 percent, while Commonwealth Bank of Australia (Other OTC: CBAUF - news) , National Australia Bank and Australia and New Zealand Banking Group were each up 0.2 percent as banks imposed higher interest rates on property investment loans.

Retail giants Woolworths and Wesfarmers, which owns supermarket chain Coles, were both down 1 percent.

New Zealand's benchmark NZX50 share index was marginally softer, easing 0.1 percent to 5,895.23, but in sight of the lifetime high touched on Wednesday.

Falls among some of the top stocks weighed on the market, with telecommunications company Spark and Fletcher Building both down about 0.7 percent.

Contact Energy (NZSE: CEN.NZ - news) gained 0.8 percent as speculation abounds that its majority shareholder Origin Energy (Other OTC: OGFGF - news) plans to sell some or all of its 53 percent stake.

Meridian Energy fell 1.4 percent as the deadline for a decision about its supply contract with the Rio Tinto owned aluminium smelter is due early next month.

Honey and health products producer Comvita was up 3 percent, buoyed by a forecast of a 35 percent lift in net earnings next.

Milk producer A2 Milk, which knocked back a potential takeover offer this week, was up 2.5 percent.

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(Reporting by Byron Kaye and Gyles Beckford; Editing by Eric Meijer)