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UPDATE 1-New Zealand posts weaker-than-expected 0.6 pct GDP growth in Q4; 2.9 pct annual growth

pct annual growth@

* NZ posts Q4 GDP growth of 0.6 pct

* Lower dairy production weighs on growth

* Consumer spending and business investment pick up

(Re-casts, adds market reaction, detail) WELLINGTON, March 15 (Reuters) - New Zealand posted gross domestic product growth of 0.6 percent in the fourth quarter, according to official statistics released on Thursday, falling short of expectations as hot weather hampered dairy production. The data prompted a sell-off in the New Zealand dollar which slipped to $0.7303 from around $0.7330. The economy's annual growth rate was 2.9 percent, below the 3.1 percent expected by analysts, who had on average forecast 0.7 percent quarterly growth. The tepid result was largely due to weakness in production of dairy, the country's top good export, which saw agricultural production fall 2.7 percent. "Hot, dry weather appeared to have a negative impact this quarter on agriculture production....Falling milk production was reflected in lower dairy manufacturing and dairy exports," said Statistics New Zealand national accounts senior manager Gary Dunnet in an emailed statement. The result also fell slightly short of Reserve Bank of New Zealand forecasts of 0.7 percent growth, which would give the bank even more impetus to keep rates on hold at a record low of 1.75 percent when it releases its monetary policy decision on March 22. The bank has signaled it would keep rates on hold, possibly for years, until it was confident inflation had recovered after spending years below the target band. Nevertheless, the economy experienced buoyant retail spending and strong business investment, signaling consumers and firms were largely getting over political jitters which had weighed on growth earlier in 2017. Household spending grew 1.3 percent in the fourth quarter as consumers splashed out on groceries and eating out, while fixed asset investments such as factory and IT equipment rose 2.1 percent, Statistics New Zealand said. A turbulent election period in the third quarter, in which a new centre-left Labour government was elected was accompanied by a quiet period with consumers and businesses holding off on big purchases as they waited for a more certain outlook.

(Reporting by Charlotte Greenfield and Marius Zaharia)