Australia's mining sector surprisingly spent more on investment last quarter, despite falling commodity prices and a dire global economic outlook, though firms did cut spending plans for the full fiscal year.

The latest estimate of spending for the fiscal year ending in June 2009 was A$38.21 billion ($24.76 billion), down from a revised previous estimate of A$42.96 billion, government figures released on Thursday showed.

The comparable estimate for the 2007/08 fiscal year had been A$30.0 billion.

The easy way to address declining cash flow expectations is to pull back on capex, which is less painful than shutting down operations and firing people, said Australia & New Zealand Bank senior commodities strategist Mark Pervan.

Government data showed the mining sector spent a record A$8.33 billion in the fourth quarter of last year, in inflation-adjusted dollars, which analysts said helped account for the rise.

Spending was up 4.9 percent from A$7.94 billion in the third quarter, and well above the A$6.27 billion spent in the fourth quarter of 2007.

We don't normally see the kinds of changes in inflation that we've seen in the past six months, with oil prices plummeting and demand coming straight off the way it did, and that's going to skew the numbers upward, said Pervan.

Prices in U.S. dollars for copper, zinc, nickel and other metals have tumbled 50 percent or more in the last year and are likely to drop further in 2009, though a weak Australian dollar means some miners continue to operate in the black.

Currency movements have had the greatest impact on local gold bullion prices, which have climbed to all-time highs above A$1,560 an ounce this month, owing to a perfect storm of a rising U.S. dollar price and a declining Australian dollar.

The sector is clearly booming, with record Australian dollar gold prices up by 60 percent over just the last six months alone, said Gavin Wendt, an analyst with sector research group Fat Prophets.

Australia's exports were a boon when global growth and commodity prices were strong. But now six of the country's top 10 trading partners are in recession and Australia is on the brink of one.

Coal and iron ore prices roughly tripled in Australian dollar terms over the six years to mid-2008. But since the last round of lucrative price talks on bulk commodity sales, prices have plunged.

A global benchmark of 19 commodity futures, the Reuters-Jefferies CRB index .CRB is down 57 percent since hitting a record high in early July. ($1=1.543 Australian Dollar)

(Reporting by James Regan and Wayne Cole; Editing by James Thornhill)

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