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SYDNEY, June 29 (Reuters) - Australian shares edged lower on Monday as investors took profits in stocks such as global miners BHP Billiton and Rio Tinto, which have rallied recently on hopes for a global economic recovery.

The benchmark S&P/ASX 200 .AXJO fell 16.9 points to 3,886.9 points, according to the latest data available. New Zealand's benchmark NZX 50 index .NZ50 nudged up 0.2 percent, or 4.5 points, to 2,775.1.

Quarter-end activity also had an impact, with traders and fund managers seen looking to sell stocks that had performed well in the second quarter to flatter the performance of their investments. "Cyclical stocks had run pretty hard and there is some profit taking," said John Sevior, head of Australian Equities at Perpetual Investments, referring to stocks that benefit the most from a pick-up in economic activity.

"People are also re-assessing their view about the pace of the global economic recovery."

A rally in stock markets and riskier assets around the world has stalled in the past two weeks as investors demanded more evidence the world economy is on a sustainable recovery path before ploughing more money into markets.

BHP Billiton (ASX: BHP.ax) fell 0.8 percent to A$33.90. BHP shares have risen 21 percent since the start of March, in line with a 20 percent gain in the S&P/ASX 200 index over the same period.

The stock is up 12.3 percent since January, compared to a 4.4 percent gain in the index.

Citi on Monday raised its earnings estimates for BHP by 7-9 percent in the financial year 2010/11, citing higher oil prices.

Citi, which has a buy rating on BHP, said there was a significant chance BHP's earnings could exceed even its latest estimates, based on spot oil and base metal prices.

"The upgraded oil price is still below spot oil of $70 per barrel," Citi said in a note to clients. The bank has a target price of A$39.40 for BHP.

Global miner Rio Tinto (ASX: RIO.ax) dropped 1.4 percent to A$50.27.

Bank stocks were mixed. Commonwealth Bank (ASX: CBA.ax) , Australia's third-largest bank, rose 0.7 percent to A$38.92 and top bank National Australia Bank (ASX: NAB.ax) added 0.3 percent to A$22.37.

But Westpac (ASX: WBC.ax) , Australia's No. 2 bank by assets, lost 1.1 percent to A$19.78, and Australia and New Zealand Banking Group (ASX: ANZ.ax) , the No. 4 bank, shed 1.2 percent to A$16.21.

Of the four bank stocks, Commonwealth has outperformed with a 33.8 percent gain since January. National Australia Bank lags the pack, up just 6.9 percent in that period.

Shane Oliver, head of investment strategy AMP Capital Investors, said Australian bank stocks still looked cheap, despite a possible rise in bad loans this year.

"Banks are still very undervalued and their margins seem to be improving," Oliver said.

Commonwealth trades at 13.7 times its 2009 earnings, compared with the sector average of 12.5 times and Japan's top bank Mitsubishi UFJ Financial Group's at 26.2 times, Reuters data showed. ($1=A$1.25) (Reporting by Koh Gui Qing)