Australia shares struggle to advance as financials temper China optimism

* Westpac slips as regulator flags higher capital requirement

* Lynas tumbles, fails to secure government nod for increase in processing limit

* Gold stocks tumble nearly 2% to weigh heavy on index

Dec 17 (Reuters) - Australian shares managed to gain modestly on Tuesday, as a troubled financial sector and steep tumble in gold stocks offset upbeat data from China, the country’s biggest trading partner.

The S&P/ASX 200 index was up 0.1%, or 5.9 points, at 6,855.6, as of 0037 GMT. The benchmark closed 1.6% firmer on Monday.

Data on Monday showed that China’s industrial output and retail sales growth accelerated more than expected in November, offering further impetus to risk appetite.

Sentiment got a further boost after a top White House adviser said late Monday the “phase-one” trade deal between the United States and China has been “absolutely completed,” adding that U.S. exports to China will double under the agreement.

Despite the positive cues, gains were limited as deep losses in gold miners and the ‘Big Four’ banks added pressure to the index.

Safe-haven gold stocks slumped nearly 2%, with top gold miner Newcrest Mining Ltd falling 1.7%, while Evolution Mining and Saracen Mineral Holdings shed 2.2% and 0.8%, respectively.

Financial stocks continued to be plagued by regulatory troubles.

Shares of Westpac Banking Corp marked their worst session in nearly two weeks after a banking regulator said it will investigate the lender over the recent money laundering allegations it faces.

Adding to woes, the regulator said Westpac will be required to hold an extra A$500 million in capital to reflect its increased operational risk profile.

Australia and New Zealand Banking Group ticked down while its 2019 AGM proceedings were underway.

In an address to shareholders, Chief Executive Officer Shayne Elliott said the lender was not aware of any impending litigation by the country’s regulator, AUSTRAC, regarding its money-laundering controls.

Commonwealth Bank of Australia fell 0.4%, while National Australia Bank dipped.

Helping limit losses on the main bourse were index heavyweights BHP Group Ltd and rival Rio Tinto Ltd , which added 0.7% and 0.8% respectively, while Fortescue Metals Group tacked on 1.2%.

On the downside, rare earths miner Lynas Corp dropped nearly 6% to its worst session since August, after the company failed to secure approval from a Malaysian regulator to increase its lanthanide concentrate processing limit for 2019.

New Zealand’s benchmark S&P/NZX 50 index rose 0.4% to 11,277.16.

New Zealand-listed shares of Westpac slipped 1%, while dairy company Synlait Milk lost 0.4%.

Reporting by Rashmi Ashok in Bengaluru, Editing by Sherry Jacob-Phillips