* Australia shares drop on China, US data
* Financial, materials sectors lead losses
* New Zealand shares hit record high, boosted by power companies (Adds analysis, quotes, stocks on the move)
By Charlotte Greenfield and Gyles Beckford
SYDNEY/WELLINGTON, Aug 3 (Reuters) - Australian shares slipped on Monday as miners were sold off after a survey showed weak factory activity in China - a major buyer of Australia's resources.
The S&P/ASX 200 index .AXJO fell 0.5 percent, or 27.064 points, to 5672.100 by 0131 GMT. The benchmark rose 0.52 percent on Friday, notching its first monthly gain since February.
The market was already on the back foot after data on Friday showed U.S. labour costs in the second quarter recorded their smallest increase in 33 years.
In China, factory activity shrank more than initially estimated in July, contracting by the most in two years, a private survey showed on Monday.
"I think those things collectively are weighing on the market," said Damien Boey, equity strategist at Credit Suisse (SIX:CSGN).
"The issue is that with a lot of this data, the absolute numbers aren't looking good, but the point is they are coming in below expectations even when some of those expectations have been revised down," he said.
The mining sector, which is highly exposed to China's market, took a beating.
BHP Billiton (LONDON:BLT) BHP.AX lost 1.3 percent and Rio Tinto (LONDON:RIO) RIO.AX fell 1.0 percent.
Mirabela Nickel Ltd MBN.AX dropped as much as 9.2 percent after the company said it expects operations at one of its mines to slow.
Most major banks were also down slightly with NAB NAB.AX off 0.7 percent, although Macquarie MQG.AX gained 0.3 percent.
Cloud-based software services provider Dubber Corp DUB.AX rose as much as 15.2 percent after entering a reseller agreement with Gateway ICT Pty Ltd.
New Zealand's NZX50 share index .NZ50 hit a lifetime high led by strong gains for power companies and several small-cap stocks.
The benchmark index rose as much as 0.6 percent to a record high at 5,963.05 before it trimmed its gains slightly.
The market was lifted by power companies as investors were relieved by a supply deal between Meridian Energy MEL.NZ and a Rio Tinto-owned aluminium smelter, which secured the plant's future for the next three years at least.
Most of the listed power companies gained between 2 and 3 percent, sending the energy utilities sub-index 1.6 percent higher.
Other leading stocks posted modest gains as investors prepare for the annual earnings season which starts next week.
Among the smaller-cap companies, campervan and tourism operator Tourism Holdings THL.NZ maintained its recent solid run, gaining another 2.1 percent to a five month high.
Carpet manufacturer Cavalier was up 8.7 percent on a modest turnover as it announced asset sales and write downs. ID:nWNBS014G4
(Editing by Shri Navaratnam)