(Adds analysis, quotes, stocks on the move)
SYDNEY Jan 20 Australian shares fell 0.7 percent on Monday, pulled down by local bluechip stocks following weak leads from Wall Street, though an uptick in metals prices helped resource companies to buoy the market.
The financial sector dragged with the Big Four banks all losing ground. Australia and New Zealand Banking Group lost 1 percent and top lender Commonwealth Bank of Australia fell 0.5 percent. Top investment bank Macquarie Group Ltd dropped 1.9 percent while mid-tier Bank of Queensland Ltd lost 1.5 percent.
The S&P/ASX 200 index fell 37.6 points to 5,268.6 by 0034 GMT, nearly 200 points below the 4-1/2 year high of 5,457.3 points touched on October 28. The benchmark slipped 0.1 percent on Friday and has fallen in seven of the last 10 sessions as investors fret over slowing growth in China, Australia's largest export market.
Uncertainty over how quickly the U.S. Federal Reserve will curtail its bond buying program is also another factor in the Australian market's lacklustre performance so far in 2014.
A handful of defensives also fell, Australia's biggest telephone company Telstra Corporation Ltd fell 0.9 percent and top consumer staples retailer Woolworths Ltd slipped 0.8 percent.
On Friday, the S&P 500 and Nasdaq declined as disappointing company results from Intel and General Electric dampened confidence as the U.S. earnings season unfolds.
"I think we'll be largely driven by offshore developments at the moment," said Simon Twiss, a dealer at Arnhem Investment Management, adding that the only sector doing well is gold, rebounding slightly after a sell-off in 2013.
"The trade in the U.S. was a touch to the weaker side, some weaker numbers than expected, generally we'll follow offshore markets in the absence of any news here."
Top Australian gold miner Newcrest Mining Ltd rallied 4.4 percent while Regis Resources Ltd climbed 2.9 percent after an uptick in bullion price.
Silver Lake Resources Ltd jumped 10.3 after the company released its gold production report for the December quarter and upgraded its full-year production guidance from 180,000-200,000 ounces to 205,000-220,000 ounces.
Elsewhere, Paladin Energy added 3.6 percent to hover at 4-month highs of A$0.58 after it agreed to sell a minority stake in its Namibian uranium mine to a subsidiary of China National Nuclear Corporation (CNNC).
Hillgrove Resources Ltd jumped 5.6 percent after to a two-month high of A$0.09 announcing its production guidance at 5,400 to 5,600 tonnes of copper for the quarter ending 31 January.
New Zealand's benchmark NZX 50 index slipped 0.2 percent to 4,884.4.
(Reporting by Thuy Ong; Editing by Eric Meijer)