(Adds analysis, quotes, stocks on the move)
SYDNEY, Aug 27 (Reuters) - Australian shares slipped 0.1 percent on Tuesday, with investors showing caution over a potential U.S. missile strike against Syria for the alleged use of chemical weapons, and a federal election at home within two weeks.
The S&P/ASX 200 index lost 5.3 points to 5,130.1 by 0137 GMT. The benchmark rose 0.2 percent on Monday.
The local bourse took a lead from U.S. stocks, which fell in light volume on Monday after U.S. Secretary of State John Kerry called Syria's use of chemical weapons "undeniable".
"Given the headlines overnight regarding the U.S. (potential strike) in Syria, it's a situation when people are prepared to sit there and wait," said Simon Twiss, a dealer at Arnhem Investment Management in Sydney.
"There is no panic or selling pressure in the market at all, there is just not a lot of trading at all," he added.
The general election is on Sept. 7.
Local corporate earnings failed to provide a buffer. Billabong International Ltd plunged 11.5 percent to a two-week low of A$ 0.50, after its annual net loss more than tripled and sales of its surf and streetcar continued to decline.
Seven Group Holdings Ltd tumbled 9.6 percent to A$6.97, after the company said it expected 2014 earnings to be lower than the previous two years and remained cautious on trading conditions.
AWE Ltd fell 2.6 percent after it reported an underlying net profit of $17.1 million, which was lower than the expected A$29.7 million according to Thomson One data.
Flight Centre Ltd bucked the trend and jumped 5.4 percent. It beat the forecast in its annual profits, a positive sign for Australian consumer sentiment, said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
"There's been a lot of wringing of hands over the weak performance of top-level retailers. It's been taken widely as a symptom of conservative consumers, and the Flight Centre result directly contradicts that view," McCarthy said.
Bluechip miners dragged on the market after copper slipped on Monday on technical selling. BHP Billiton Ltd and Rio Tinto Ltd 0.5 percent and 0.6 percent respectively.
Gold miner Newcrest Mining Ltd bucked the broader downward trend and rose 0.3 percent, as bullion prices rose to an 11-week high.
"When we factor the up moves in industrial metals and gold, we're seeing pretty reasonable support for the Australian market," said CMC's McCarthy.
Australia's big four banks managed to stay in positive territory. Top lender Commonwealth Bank added 0.7 percent, while Australia and New Zealand Banking Group climbed 0.8 percent.
New Zealand's benchmark NZX 50 index dipped 0.2 percent to 4,535.6.
Reporting by Thuy Ong and Maggie Lu Yueyang; Additional reporting by Michael Sin; Editing by Eric Meijer