Australia shares fall on weak resources, erasing 2014 gains

* Shares (Frankfurt: DI6.F - news) down 0.4 pct, off 0.1 pct for the year

* BHP, Rio down 2 pct, Fortescue drops 6 pct

* 76 shares up, 110 down, 13 unchanged (Adds analysis, quotes, stocks on the move)

By Swati Pandey and Naomi Tajitsu

SYDNEY/WELLINGTON, Nov 20 (Reuters) - Australian shares fell 0.4 percent on Thursday, giving up this year's gains, as investors dumped miners on continued pressure on iron ore and coal prices and stayed cautious about banking and supermarket stocks.

The S&P/ASX 200 index eased 20.5 points to 5,348.3 by 0111 GMT. The index has fallen eight out of the last ten sessions and was down 0.1 percent year-to-date.

"We are back to square one," James McGlew, executive director of corporate stockbroking at Argonaut Ltd in Perth.

"Our institutional clients are not interested in picking up the bottom of the resources sector. On healthcare, we are getting a lot of inquiry," he said, adding that defensive stocks and small industrials were preferred at present.

Miners weighed heavily on the index, with BHP Billiton (NYSE: BBL - news) and Rio Tinto (Xetra: 855018 - news) down about 2 percent and Fortescue shares falling 6 percent.

Iron ore prices slid to their lowest in more than five years on Wednesday and have fallen nearly 50 percent this year.

In a sign of appetite for healthcare, the institutional offer for state-owned health insurer Medibank, was "well covered with high quality demand", a person knowledgeable about it said.

Supermarket chains Woolworths and Wesfarmers fell on concerns about competition.

Commonwealth Bank of Australia (Other OTC: CBAUF - news) , Australia and New Zealand Banking Group and National Australia Bank rose while Westpac was unchanged.

New Zealand's benchmark NZX50 index, near record highs, was little changed at 5,524.90 in early trade.

Fisher and Paykel Healthcare jumped 3 percent to a lifetime high of NZ$5.79 ($4.53) after the medical equipment maker reported rising half-year profit and raised its interim dividend.

A2 Milk fell 1.6 percent to NZ$0.61, extending its retreat from a four-month high of NZ$0.69 earlier in the week as investors continued to book profits.

Blue-chip shares eased, with telecom provider Spark falling 1 percent to NZ$3.22, further retreating from a seven-year high of NZ$3.30 hit a week ago. Casino operator SkyCity Entertainment fell 0.5 percent. (Editing by Richard Borsuk)