Australia shares slip below par; investors cautious ahead of China data

(Adds analysis, quotes, stocks on the move)

SYDNEY, Jan 6 (Reuters) - Australian shares slipped 0.2 percent on Monday as a dip in commodity prices overnight brought down resource stocks, and with investors trading cautiously ahead of Chinese service industry data due later in the day.

Heavyweight miners pulled the market below par as copper fell on expectations of increased supplies and concern over Chinese economic growth.

BHP Billiton Ltd and Rio Tinto Ltd (Xetra: 855018 - news) fell 0.6 percent and 0.9 percent each. Smaller miner Sirius Resources lost 1.3 percent.

The S&P/ASX (Berlin: AUX.BE - news) 200 index was 11.8 points lower at 5,338.3 at 0057 GMT. The benchmark added 0.5 percent last week for its third week of gain.

The index has recovered from a four-month low of 5,028.2 touched on Dec. 12, and is now hovering some 100 points below the 4 1/2 year high of 5,457.3 hit on Oct. 28.

A lack of trading cues from overseas left the benchmark volatile, after U.S. stocks ended a choppy session mostly flat on Friday. Investors in the U.S. were still digesting comments from Federal Reserve officials that raised questions about how quickly the central bank will end its economic stimulus program.

"Investors are likely to wait for more evidence of an improving (global) economic outlook in order to push stock indices past end-of-year highs," said Ric Spooner, market strategist at CMC Markets in a note to clients.

"Strong gains in December have left markets caught between rising confidence over the outlook for world growth and full valuations that already allow for this."

Oil and gas stocks fell, with U.S. crude losing over $1 on Friday after data showed a build in distillates that was larger than analysts had expected.

Woodside Petroleum Ltd (Other OTC: WOPEF - news) slipped 1.3 percent and Santos Ltd lost 2 percent.

Offering a counterweight was a handful of bluechip stocks. Telecommunications provider Telstra Corporation Ltd edged 0.2 percent higher and the Commonwealth Bank of Australia (Other OTC: CBAUF - news) added 0.1 percent.

Overall market activity was somewhat muted, with 117.2 million shares traded by 0056 GMT, compared with last year's daily average of 678.7 million.

Analysts said concern over Chinese economic growth was affecting sentiment in Australia, with investors waiting for an upswing in China to push Australian stocks to new highs.

China's HSBC Services Purchasing Managers' Index is due later in the global day and will show whether growth in Australia's largest export market is slowing. A PMI reading above 50 indicates expansion.

Elsewhere, technology and software developer iSonea Ltd climbed 10 percent after the company appointed a new chief executive officer.

New Zealand's benchmark NZX 50 index was flat at 4,769.2 points. (Reporting by Thuy Ong; Editing by Christopher Cushing)