Australia shares slip on local inflation data, lack of Wall St leads

(Adds analysis, quotes, stocks on the move)

SYDNEY, Jan 23 (Reuters) - Australian shares slipped 0.1 percent on Thursday as investors turned more cautious after disappointing local CPI (Other OTC: CPICQ - news) data on Wednesday and Wall Street's muted finish overnight.

In the finance sector, bluechips Westpac Banking Corp and Australia and New Zealand Banking Group slipped 0.5 percent and 0.1 percent.

Insurance Australia Group lost 2.9 percent to one-month lows of A$5.60 after the company reduced its gross written premium (GWP) growth guidance to 3 percent to 5 percent. Rival Suncorp Group Ltd plumbed 2.3 percent.

The S&P/ASX 200 index slipped 7.7 points to 5,312.1 by 0041 GMT. The benchmark slipped 0.2 percent on Wednesday and has drifted lower in January, falling for seven of the past 10 sessions.

"I think it's centring around what's happening in the local economy, the pressure we've had from those bad jobs numbers, and then the pressure again from the CPI numbers," said Kara Ordway, market-maker and trader at City Index.

On Wednesday, Australian consumer price inflation rose by far more than expected last quarter as the costs of food, holiday travel and tobacco all rose.

"It's also created a general bad feeling within the local stock market and it's really following through in terms of underperforming compared to what we're seeing in the U.S. and the U.K."

Other analysts said the Australian market would likely to continue underperforming its global peers until economic conditions, including high inflation in Australia and slowing growth in China, improved significantly.

The mining sector also dipped as copper slipped and iron ore fell to its weakest level in more than six months.

Top (Taiwan OTC: 8419.TWO - news) miner BHP Billiton Ltd fell 0.2 percent and OZ Minerals Ltd dropped 1.1 percent.

Whitehaven Coal Ltd slipped 0.5 after the resource company said it expects to see a modest drop in prices for its metallurgical coal in the current quarter on subdued demand from Asian steelmakers.

Some defensives traded higher, helping to buoy the market from the session's lows. Australia's largest telecommunications provider Telstra Corporation Ltd added 0.2 percent and biotechnology company CSL Ltd (Other OTC: CMXHF - news) rose 0.8 percent.

Newcrest Mining Ltd climbed 1.9 percent after the gold producer reported an increase in gold and copper production compared to a year prior and said production for 2014 will be in the top of its guidance range.

Dart Energy Ltd soared 14.3 percent to three month highs of A$0.16, recovering modestly from a rout in share price in 2013, where the stock plummeted 32.3 percent. Last week Total (Brussels: FP.BR - news) became the first major oil and gas company to strike a deal to explore for shale gas in Britain, with Dart Energy one of three firms involved in the deal.

New Zealand's benchmark NZX 50 index shed 0.4 percent to 4,930.3.

(Reporting by Thuy Ong; Editing by Eric Meijer)