* Material stocks lead losses on soft base metal, iron ore prices
* Challenger plummets, flags 97 pct profit drop in H1
By Shriya Ramakrishnan
Jan 23 (Reuters) - Australian shares edged lower on Wednesday following a slump on Wall Street, with commodity and energy stocks leading losses as concerns over slowing global growth, trade tensions and disappointing corporate forecasts weighed on risk appetite.
The S&P/ASX 200 index .AXJO slid 0.2 percent or 8.7 points to 5,850.1 by 0040 GMT. The benchmark fell 0.5 percent on Tuesday.
Global sentiment remained fragile after the International Monetary Fund trimmed its global growth forecast, mainly reflecting signs of weakness in Europe and the months-long U.S.-China tariff war.
Meanwhile, trade war woes continued to weigh on the mood after the Financial Times reported that Washington rejected an offer for preparatory trade talks from Beijing ahead of high-level negotiations scheduled for next week. White House economic adviser Larry Kudlow told CNBC the report was not true.
"Overall it has been a pretty big run, so there is a bit of steam coming off," Mathan Somasundaram, a Blue Ocean Equities market portfolio strategist said, referring to the strong gains the benchmark has posted since the turn of the year.
The main index has risen 3.7 percent in January so far.
Pressured by overnight weakness in base and bulk metal prices, the metals and mining stocks index .AXMM fell 0.9 percent to a more than two-week low, dragging down the benchmark. MET/L IRONORE/
The world's biggest miner BHP Group BHP.AX shed 1 percent to its lowest since Jan. 4, while its rival Rio Tinto (LON:RIO) RIO.AX fell 0.6 percent.
Meanwhile, a more than 2 percent drop in global benchmark Brent oil futures LCOc1 curbed investor appetite for energy stocks .AXEJ , which slid 1.3 percent.
Australia's No.2 indepedent gas producer, Santos Ltd STO.AX , due to report fourth-quarter production on Thursday, weakened 1.5 percent, while its peer Oil Search OSH.AX slipped as much as 2.5 percent to a two-week low.
Meanwhile, fund manager Challenger Ltd CGF.AX dived 14.4 percent and was set to post its worst session in nearly a decade after flagging a 97 percent drop in interim profit, citing the effect of weak equity markets on its annuity business. the trend, healthcare stocks .AXHJ , a defensive sector in times of market volatility, rose 0.6 percent.
CSL Ltd CSL.AX , the country's fifth-biggest firm by market value, gained 0.8 percent and Ramsay Health Care RHC.AX rose 0.5 percent.
Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.3 percent or 23.66 points, to 9,090.97.
Financials and utility stocks led losses, with Meridian Energy MEL.NZ falling 0.8 percent, while NZ-shares of Westpac Banking Corp WBC.NZ dropped 0.6 percent.
Earlier in the day, data showed that New Zealand's consumer price index rose in the fourth quarter, bringing relief to the central bank and dimming the chance of an interest rate cut.