* Banks slip as review lists looming challenges
* Gold miners dip after bullion trades close to near 4-week lows
* Top 20 stocks BHP, TLS edge higher (Adds analysis, quotes, stocks on the move)
By Thuy Ong and Naomi Tajitsu
SYDNEY/WELLINGTON, July 15 Australian shares reversed early gains to dip 0.1 percent on Tuesday as a financial system report dragged on banks to pull the market lower, offsetting Wall Street's moves higher overnight as the Dow Jones hit an intraday record.
Banks floundered as a government-backed review of the Australian financial system said it had performed "reasonably well" in facilitating economic growth, but noted a number of challenges loomed including fiscal pressures, slowing productivity growth and technological change.
Top bank by market capitalisation, Commonwealth Bank of Australia declined 0.6 percent, while Australia and New Zealand Banking Group lost 1 percent.
The S&P/ASX 200 index slipped 8.6 points to 5,502.8 by 0208 GMT.
"The market from a technical point of view is just range-bound and will continue to be range-bound for a little while longer," said Tim Radford, global investment manager at Rivkin Securities.
"There's lack of fundamental catalysts to drive our equities higher, there's nothing to be overly optimistic about."
Among top 20 stocks, top telecommunications provider Telstra Corporation Ltd added 0.4 percent, while consumer staple retailer Wesfarmers Ltd rose 0.2 percent. Major miner Rio Tinto Ltd climbed 0.8 percent.
Gold was trading close to its lowest in nearly four weeks on Tuesday, struggling as bullion suffered losses from profit-taking as stronger global equities dented its safe-haven appeal. Among gold stocks, Australia's top gold producer Newcrest Mining Ltd dropped 1.4 percent, while Regis Resources Ltd tumbled 2.8 percent.
After a promising start to the year, the market has lost momentum, shuffling sideways after hitting a near 6-year high of 5,554.5 on April 29, due to falling iron ore prices and a hit to consumer confidence from an unexpectedly austere federal budget.
Whitehaven Coal Ltd bounced 4.6 percent to A$1.54, its highest since late May after saying it expects a slight improvement in metallurgical coal prices in late 2014 as producers cut supply, while the company also aims to sell down a 20 percent to 30 percent stake in its Vickery Coal project within the next 12 months.
New Zealand's benchmark NZX-50 index slipped 9.7 points to 5,118.14, led by losses in telecommunications network operator Chorus and boardroom management software developer Diligent, which each fell around 1.7 percent.
Further losses were limited by a 3.5 percent jump in Air New Zealand after it announced an agreement with Air Lease Corporation of the United States to lease five new Airbus aircraft in the a320neo family, further boosting the national carrier's fleet.
Air New Zealand shares rebounded from a three-month low hit on Monday, and were heading for their biggest daily gain since late 2013. (Editing by Eric Meijer)