* Q2 business investment -4.0 pct q/q vs forecast -2.5 pct
* Spending plans for 2015/16 up a touch at A$115 bln
By Ian Chua
SYDNEY, Aug 27 (Reuters) - Australian business investment suffered another big drop last quarter as miners continued to cut back, data released on Thursday showed, though a small upgrade to spending plans for this financial year gave a depressed local dollar a slight boost.
The data is unlikely to comfort the Reserve Bank of Australia (RBA), which is counting on a stronger pick up by non-mining sectors.
"They already have a weak outlook for non-mining investment, unfortunately this just confirms that outlook, there's no material upside," said Annette Beacher, head of Asia Pacific Research at TDSecurities.
Thursday's data from the Australian Bureau of Statistics reported investment fell 4.0 percent to A$34.3 billion ($24.5 billion) in the second quarter. This followed a downwardly revised 4.7 percent drop in the first quarter, the biggest decline since late 2013.
Spending plans for 2015/16 came in at A$114.8 billion, beating expectations for A$112.5 billion. That was still 23.4 percent lower than what companies were planning to spend this time last year.
Sectors outside of mining showed a bit more inclination to loosen purse strings and investors reacted by bidding the Australian dollar up about a quarter of a U.S. cent to $0.7153 .
"Today's report did show slightly greater enthusiasm for spending by some firms but, overall, the moving parts pretty much offset each other, so the overall effect is underwhelming," said JPMorgan (NYSE:JPM) chief economist Stephen Walters.
After a decade of madcap expansion, mining is in full retreat as projects reach completion and lower prices for many commodities force companies to cut costs.
The recent plunge in Chinese stocks has added to fears that economic growth in the world's second biggest economy will slow further still, dampening demand for Australia's key commodity exports such as iron ore.
The RBA is hoping that low interest rates and a lower exchange rate will help spur the non-mining sector, but the transition is occurring at a glacial pace.
This should keep the door ajar for another interest rate cut and interbank futures 0#YIB: are fully priced for a quarter point easing by Christmas.
"When you look at global developments, in particular China, commodity prices, and implications on Australia's real economy, we would have to say that it fits into a picture whereby the case to cut is stronger," said Su-Lin Ong, senior economist at RBC Capital Markets.
The central bank holds its September meeting next week but is considered almost certain to hold rates steady. It has switched to a wait-and-see mode since it last cut the cash rate to a record low 2 percent in May. ($1 = 1.4002 Australian dollars) (Editing by Simon Cameron-Moore)