Australia shares set for biggest weekly drop in 1-1/2 yrs

* Shares (Dusseldorf: DI6.DU - news) fall 0.6 pct, tracking Wall Street

* Financials, energy stocks drop, Telstra at 13-1/2-yr highs

* 146 shares down, 46 up, 8 unchanged (Adds analysis, quotes, stocks on the move)

By Swati Pandey and Gyles Beckford

SYDNEY/WELLINGTON, Jan 16 (Reuters) - Australian shares fell for a fifth consecutive session on Friday, as investors fretted over global growth, weak U.S. corporate earnings and the impact of declining commodities prices on the export-driven economy.

The S&P/ASX 200 index fell 0.6 percent or 31.7 points to 5,299.7 by 0114 GMT. The benchmark ended down 0.4 percent on Thursday. If sustained, this would be its worst weekly performance in 1-1/2 years.

"We are in for a rough ride in Australia," said Shane Oliver, head of investment strategy at wealth manager AMP . "I won't be surprised if we see more correction in the first half."

Concerns about the U.S. economy and quantitative easing by the Federal Reserve, worries about deflation in the euro zone and the start of the earnings season in Australia will keep investors cautious for some time, Oliver added.

The benchmark, which barely moved in 2014, has had a rocky start to the new year. The index is down about 2 percent so far this month.

Energy shares were among the worst performers on the index on Friday, with Liquified Natural Gas down 5.5 percent and Beach Energy and Drillsearch Energy falling more than 2 percent.

Financials added to the weakness with QBE Insurance (Other OTC: QBEIF - news) down over 5 percent. Among major banks National Australia Bank and ANZ Banking Group were down about 0.7 percent each.

Gold miners shone with Newcrest Mining (Dusseldorf: NMA.DU - news) , Resolute Mining and Northern Star Resources rising 4 to 11 percent after gold jumped to a 4-month high.

Among defensives, Telstra continued its positive run, trading at 13-1/2-year highs on Friday. It is up 4.2 percent so far in January, far outperforming the broader market.

New Zealand's benchmark NZX50 index also traded weak, down 10.1 points or 0.2 percent at 5,631.99.

The market leader, Fletcher Building (NZSE: FBU.NZ - news) was down 1 percent at NZ$8.16, which offset a 1.4 percent gain for the number two stock telecommunications company Spark which hit a seven-week high of NZ$3.22.

Retailing stocks remained under pressure with outdoor clothing and goods operator Kathmandu down 4.2 percent to NZ$1.82, to lows last seen in November 2012 and taking its losses this week to nearly 7 percent.

However, small stocks provided some bright spots in the generally quiet market, with education provider Intueri up 3.7 percent at NZ$2.80. (Editing by Jacqueline Wong)