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By Nichiket Sunil

Jan 9 (Reuters) - Australian shares snapped a five-day rally on Thursday, dragged by consumer staples and resources stocks and Star Entertainment plunging to a record low, while weaker-than-expected domestic retail sales data also weighed on sentiment.

The S&P/ASX 200 index .AXJO fell 0.2% to 8329.2 at the close of trade. The benchmark gained 0.3% on Wednesday.

Retail sales had the biggest increase in 10 months in November as Black Friday discounting drew cost-conscious shoppers, but the rise missed forecasts and analysts suspect the extra demand was just brought forward from Christmas.

The consumer staples sector .AXSJ dropped 0.8% on the day, with big-cap retailers Woolworths WOW.AX and Coles COL.AX falling 0.8% and 0.6%, respectively. Jewellery chain Lovisa LOV.AX tumbled 10.5% on a UBS rating cut.

"Between the retail sales miss in Australia, (major trading partner) China's deflationary worries and a risk event in the form of U.S. NFP (jobs) data on Friday, investors had various reasons to err on the side of caution today," said Tim Waterer, the chief market analyst at KCM Trade Global.

A hotter-than-expected U.S. nonfarm payroll report on Friday could cast further concern over the pace of U.S. rate cuts, with the Federal Reserve already worried about the inflationary impact of President-elect Donald Trump's proposed tariffs.

Star Entertainment SGR.AX crashed 33.3% to a record low after the embattled casino operator flagged a liquidity crunch, months after securing a debt restructuring lifeline.

Energy stocks .AXEJ fell 0.4%, tracking the drop in crude oil prices. Miners .AXMM were flat as underlying iron ore prices traded in a narrow range. O/R IRONORE/

Heavyweight financials .AXFJ retreated 0.3% after their 1.3% jump in the previous session, their best in 17 days.

Gold stocks .AXGD provided some respite, closing 1.2% higher.

Arcadium Lithium LTM.AX jumped 7.9%, the most on the index, after its takeover by Rio Tinto RIO.AX cleared a U.S. national security review.

New Zealand's benchmark S&P/NZX 50 index .NZ50 finished 0.7% lower at 12,943.74. ($1 = 1.6129 Australian dollars)

(Reporting by Nichiket Sunil in Bengaluru; Editing by Savio D'Souza)

((Nichiket.Sunil@thomsonreuters.com;))

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