* Financials, consumer staples pull Aussie shares down
* Oil price rally boost energy, material stocks
* NZ hurt by telecoms
By Christina Martin
March 19 (Reuters) - Australian shares erased early gains to slip on Monday as financials and consumer staples dragged the index lower, with broader Asian markets jittery ahead of the U.S. Federal Reserve meeting later in the week.
The S&P/ASX 200 index .AXJO inched down 0.2 percent, or 10.6 points, to 5,938.8 by 0112 GMT. The benchmark ended 0.5 percent up on Friday.
Investors were cautious in anticipation of the two-day Federal Open Market Committee meeting later this week, at which the U.S. central bank is expected to raise interest rates for the first time this year. MKTS/GLOB
Financial stocks in Australia .AXFJ fell for a fifth straight session, down as much 0.5 percent, with the 'Big Four' banks sliding between 0.2 percent and 0.8 percent.
Consumer staples also saw stocks slip, with Wesfarmers Ltd WES.AX being the biggest loser on the sub-index.
"Wesfarmers came out on Friday and said they were going to sell off their Coles supermarket division. The stock was up very strongly and it just seems as though it is giving back some of those gains. That would be the major reason why consumer staples are weaker," said Christopher Conway at the Australian Stock Report.
Meanwhile, energy stocks .AXEJ edged as much as 1.5 percent higher, posting their biggest intraday percentage gain in a week.
Beach Energy Ltd BPT.AX , Caltex Australia Ltd CTX.AX and Woodside Petroleum Ltd WPL.AX all showed gains ranging from as much as 1.3 percent to 2.5 percent.
Materials stocks .AXMM hit their highest in over a week, up as much as 0.7 percent and on track for a fourth straight session of gains, with index heavyweights BHP Billiton (LON:BLT) BHP.AX and Rio Tinto (LON:RIO) Ltd RIO.AX jumping 0.8 and 0.9 percent, respectively.
Oil prices jumped on Friday, with Brent crude futures hitting their highest in more than two weeks, while U.S. stock prices rose on strong industrial output numbers. O/R .N
"Materials are a bit of a funny one and that is because it has BHP in it of course. BHP has a lot of exposure to oil; it is the biggest oil producer in Australia, bigger than Wooodside and all the other oil-only commodities companies, and we all know it has got a huge weight," said Conway.
"It is BHP's oil exposure which is giving it a gain and driving the rest of the (materials) sector, overcoming the weakness in iron ore prices."
Materials gained in Australia despite a slide in iron ore and base metal prices. MET/L IRONORE/
New Zealand's benchmark S&P/NZX 50 index .NZ50 inched down 0.2 percent, or 16.56 percent, to 8,460.52, hurt by telecoms and industrials.
The biggest drag on the main index was telco Chorus Ltd CNU.NZ , which fell as much as over 8 percent, its biggest drop in six months.