* Materials biggest weight on index
* Domestically focused stocks see increased interest
By Shanima A
Nov 28 (Reuters) - Australian shares traded slightly lower on Wednesday as losses in the materials sector from concerns about a slowdown in Chinese demand offset gains across domestically insulated stocks.
Investors stuck to cautious plays after comments from White House economic adviser Larry Kudlow sowed uncertainty over a conclusion to the ongoing Sino-U.S. trade row. S&P/ASX 200 index .AXJO fell 0.2 percent or 10.5-points to 5717.8 by 0107 GMT. The benchmark gained 1 percent on Tuesday.
"We've got elevated headline risk at the moment, that is, a single tweet or a single headline could change the direction of the market and that naturally means that investors are being very cautious in trade today," said Michael McCarthy, Chief market strategist at CMC Markets.
Pressure on Chinese steel markets was being reflected across broader commodity prices, which was weighing on Australian miners, he added. Group BHP.AX , the world's biggest miner and the heaviest stock on the index, fell 1.8 percent, dragging the benchmark lower.
The metals and mining sub-index .AXMM shed about 1.5 percent.
Iron ore futures in China fell more than 5 percent on Tuesday to their lowest in four-and-a-half months, while copper CMCU3 ended down 1.1 percent having hit its lowest since mid-November. IRONORE/ MET/L
Financial stocks .AXFJ largely traded sideways, although the country's largest-listed wealth manager AMP Ltd AMP.AX fell 4 percent after it confirmed a total bill of A$778 million ($563 million) to compensate customers who had received bad advice or been wrongly charged. investor focus shifted to domestic sectors such as healthcare and consumer stocks, which are usually insulated from global trade worries.
"It's because those businesses don't go anywhere in a trade concern ... that support is focused on local businesses rather than those with international exposure," said McCarthy.
Shares in the health care sector .AXHJ gained as much as 1.3 percent, while retail heavyweight Woolworths Group WOW.AX rose 0.3 percent.
New Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.5 percent or 43.97 points to 8,717.8.
The index was mostly supported by gains in the utilities sector. Electricity retailer Meridian Energy Ltd MEL.NZ rose as much as 1.3 percent.
New Zealand's central bank said it would further loosen mortgage lending restrictions at the start of next year as the risk posed to the financial system from a previously red-hot housing market ease. ($1 = 1.3829 Australian dollars)