* Dec trade surplus jumps to A$3.5 bln, smashes forecasts
* Shrinking current account deficit lessens risk of ratings cut
* Approvals to build new homes dip 1.2 pct as market cools
By Wayne Cole
SYDNEY, Feb 2 (Reuters) - Australia boasted its biggest trade surplus on record in December as surging commodity prices showered the resource-rich nation in cash, a windfall that could lessen the risk of a downgrade to its triple A credit rating.
Thursday's data from the Australian Bureau of Statistics showed a trade surplus of A$3.51 billion ($2.67 billion) in December, handily outpacing forecasts of A$2.2 billion.
The previous month was also revised up sharply to A$2.0 billion, a double win that lifted the local dollar a quarter U.S. cent to $0.7624 AUD=D4 .
Exports jumped by 5.3 percent to a record A$32.6 billion, led by double-digit gains in coal and iron ore, while imports edged up only 0.7 percent.
For the December quarter as a whole, the country notched up a surplus of A$4.8 billion in a startling turnaround from the previous quarter's A$3.8 billion shortfall.
That will also sharply shrink the fourth-quarter current account deficit, a timely improvement given S&P Global Ratings has cited a reliance on foreign funding as one reason it might cut Australia's top credit rating.
"The current account deficit is the mirror image of our borrowing from the rest of the world," said CBA chief economist Michael Blythe. "The implication is that our reliance on the savings of the rest of the world should decline."
"These developments should feed into the debate about the sustainability of Australia's AAA rating in a positive way."
The rush of export earnings will also ripple through the economy via higher profits, incomes and tax receipts. That will again be a timely source of support given another engine of growth - residential construction - looks to be near its peak.
A separate report out on Thursday showed approvals to build new homes dipped 1.2 percent in December, the fourth fall in five months.
The pipeline of work yet to be done is still at record highs and should last longer in this cycle as much more of the construction comprises high-rise apartment towers.
Yet the market is set to cool as the year progresses.
"After housing activity rose consecutively for four years, its longest ever boom, we now think that it has probably already peaked at over 6 percent of nominal GDP," said George Tharenou, an economist ay UBS.
If right, home building could make little net contribution to economic growth over all of 2017, having added half a percentage point last year. ($1 = 1.3127 Australian dollars)