Australia shares slip on Fed taper speculation; miners cap losses

(Adds analysis, quotes, stocks on the move)

SYDNEY, Dec 5 (Reuters) - Australian shares fell 0.6 percent on Thursday morning after Wall Street finished lower on speculation that better U.S. data might open the door wider for the Federal Reserve to start trimming its stimulus soon.

Sentiment was also soured by data showing Australia posted a bigger-than-expected trade deficit in October.

Big banks weighed on the market, with top lender Commonwealth Bank of Australia (Other OTC: CBAUF - news) down 0.9 percent and Westpac Banking Corp losing 1.7 percent.

But higher iron ore prices and a weaker Australian dollar lent support to miners, with BHP Billiton Ltd and Rio Tinto Ltd rising 0.7 percent and 0.3 percent, respectively, and capping losses for the broader market.

"It's a little bit of asset rotation back to the miners (from banks) on the back of Aussie dollar," said Will Cleland, associate director of institutional dealing at PhillipCapital.

"If people are confident the Aussie dollar will go 80 cents next year, their (miners) earnings will increase 10-15 percent."

The Australian dollar plumbed a three-month low on Wednesday, while spot iron ore jumped to a three-month high above $138 a tonne.

The S&P/ASX (Berlin: AUX.BE - news) 200 index dropped 31.9 points to 5,241.9 by 0133 GMT. The benchmark rose 0.4 percent on Wednesday.

The market has come under pressure as investors weighed the latest U.S. data and its implications for the Federal Reserve's tapering agenda, IG (LSE: IGG.L - news) market strategist Stan Shamu said in a note to clients.

U.S. private-sector hiring rose in November at the fastest clip in a year, opening the door wider for the Federal Reserve to start trimming its bond purchases within the next few months.

"This ADP print certainly raises upside risk to Friday's November payrolls which are expected to come in at 184,000. A non-farm payrolls print around 200,000 is what many analysts feel is needed to reinforce the December taper argument," Shamu said.

IPO SURGE

The recent surge in initial public offerings has also seen investors rotating out of their current exposure into new shares, said PhillipCapital's Cleland.

"There is not much new money into the market, (but) the money has to come from somewhere. What they are doing is rotating," he said, noting a 1.1 percent fall in electronics retailer JB Hi Fi Ltd following Dick Smith Holdings Ltd's debut on Wednesday.

Data intelligence company Veda Group Ltd surged 34 percent on its first day of trading, after raising A$341 million in its IPO.

Elsewhere, Qantas Airways Ltd fell 12.3 percent, becoming the biggest percentage loser in the market, after the airline warned it expects an underlying pretax loss between A$250 million ($225 million) and A$300 million for the first half of the current year.

Fairfax Media (Berlin: FXH.BE - news) jumped 5.8 percent after it said late on Wednesday that it agreed to sell holiday rentals website Stayz to U.S.-listed holiday rentals group HomeAway Inc (NasdaqGS: AWAY - news) for about A$220 million.

New Zealand's benchmark NZX 50 index dropped 0.4 percent to 4,713.6. (Reporting by Maggie Lu Yueyang; Editing by Chris Gallagher)