Dec 16 (Reuters) - Australian shares dropped on Monday, with commodities being the top laggards on the resource-heavy bourse, as traders remained on the sidelines ahead of a policy meeting where the U.S. Federal Reserve is expected to cut its interest rate.

The S&P/ASX 200 index .AXJO was down 0.3% at 8272.2, as of 2328 GMT. The benchmark ended 0.4% lower on Friday.

Traders see a nearly 97% chance of a rate reduction at the Fed's Dec. 17-18 meeting, according to CME's FedWatch Tool. However, they indicate chances of a pause in January.

On the Sydney bourse, heavyweight miners .AXMM fell as much as 1.8%, to record their lowest levels since Dec. 9.

The sub-index is on track to record a fourth straight session of losses, if current trend holds.

Iron ore prices declined on Friday as investors weighed China's latest commitment to implement additional stimulus measures to support its struggling economy. IRONEORE/

Mining behemoths BHP Group BHP.AX, Rio Tinto RIO.AX and Fortescue FMG.AX lost between 1.3% and 2.1%.

Gold stocks .AXGD fell as much as 2.3%, tracking a decline in bullion prices last week. GOL/

The sub-index touched its lowest level since Dec. 5 and was on track to record a third consecutive session of losses.

Shares of gold producer Northern Star Resources NST.AX were down by 1.2%, while Evolution Mining EVN.AX lost 2%.

Energy stocks .AXEJ dropped by 0.7%, with shares of sector heavyweights Woodside WDS.AX and Santos STO.AX shedding 0.6% and 0.5%, respectively.

Rate-sensitive financials .AXFJ were flat.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 was flat at 12,752.41 points.

(Reporting by Roshan Thomas in Bengaluru; Editing by Sherry Jacob-Phillips)

((Roshan.Thomas@thomsonreuters.com))

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