* Miners and financials drag index lower
* Property developers and builders rise to offset losses
* Investors not expecting trade deal anytime soon -analyst
By Rashmi Ashok
May 22 (Reuters) - Australian shares slipped on Wednesday as investors worried that the lack of progress in talks between the United States and China could signal a protracted trade war and harm the Australian economy.
The S&P/ASX 200 index .AXJO fell 18.3 points or 0.3% to 6,481.8 at 0106 GMT. The benchmark rose 0.4% on Tuesday.
China is Australia's biggest trading partner and the negative impact of the trade war on the Chinese economy could harm demand for Australian products.
"There is a lot of posturing and chest beating from U.S. President Donald Trump and it just makes it hard to really get a feeling in the market. Investors are just not convinced," said Damian Rooney, director of equity sales at Argonaut.
"Chinese leader Xi Jinping saying they were starting on a new 'Long March' doesn't really sound like a quick fix," he added.
President Xi Jinping called for a new Long March in a speech at Jiangxi, where Mao Zedong began his ascent to power during a series of retreats by the Red Army to evade pursuing Nationalist forces, state media reported.
Investors took it as a sign that China is preparing for a protracted trade war, with no clear path to a trade deal in the near future.
Financials .AXFJ fell 0.8% after a near 8% rally over the previous two sessions.
Commonwealth Bank of Australia CBA.AX and Australia and New Zealand Banking Group ANZ.AX each fell 0.9%.
Lenders were also hit after Australia's financial regulator said it may impose additional capital requirements on some financial institutions after it found weakness in their ability to self-assess non-financial risk. .AXMM fell 0.5% despite record high iron ore prices. Fortescue Metals Group FMG.AX fell as much as 9% as its shares traded ex-dividend.
Mining giant BHP Group BHP.AX and rival Rio Tinto (LON:RIO) RIO.AX fell as much as 0.8% and 0.5%, respectively.
Gold stocks .AXGD slipped nearly 1.2%. Top miner Newcrest Mining NCM.AX fell as much as 1.2% while Northern Star Resources NST.AX shed 1.8%.
Offsetting losses on the index, property and building material manufacturers continued to rise, boosted by Australia's prudential regulator easing lending criteria for home loans.
James Hardie JHX.AX rose 2.4%, Adelaide Brighton ABC.AX added 6.1% while property developer Stockland Corporation SGP.AX tacked on 3.3%. Boral BLD.AX gained 1.4%.
New Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.1% or 10.78 points to 10,226.87.
Utilities provider Infratil IFT.NZ rose 6.4% while dairy giant a2 Milk Company ATM.NZ edged higher.