* RBA skips chance to ease, keeps rates at 3 pct
* Statement balanced, but emphasises stimulus yet to be felt
* Market pares chance of further policy easing this year
* Data mixed as building approvals rise, car sales slump
By Wayne Cole
SYDNEY, May 5 (Reuters) - Australia's central bank held its key cash rate at a record low of 3.0 percent on Tuesday, saying the full effect of past stimulus had yet to be felt and pointing to signs of stabilisation abroad.
The decision was widely expected but investors detected an optimistic tinge to the Reserve Bank of Australia's (RBA) post-meeting statement, and moved to price in less chance of further easing and a higher Australian dollar.
"It appears the RBA may think it has done enough for this cycle," said Peter Jolly, head of research at National Australia Bank. "You would need a faltering in the recovery to drive the RBA back to rate cuts."
The central bank has already chopped rates by a massive 425 points since September, easily the most aggressive easing since the prior recession of 1991.
The Labour government has also waded in with over A$52 billion ($38.5 billion) in stimulus and is likely to announce more spending it its annual Budget next week.
"Much of the effect of these changes is yet to be observed," said RBA Governor Glenn Stevens. "The stance of monetary policy, together with the substantial fiscal initiatives, will provide significant support to domestic demand over the period ahead."
(For a graphic of cash rates see:
http://graphics.thomsonreuters.com/059/AU_RBA0509.jpg)
Bill <0#YBA:> and bond futures
"The RBA has made it quite clear that with the stimulus in the system, and the improvement in financial markets, they are happy to leave the cash rate where it is," said Warren Hogan, head of Australian economics at ANZ. "I imagine that will remain the case for the next few months."
Notably, Stevens pointed to signs of a recovery in China as reason for optimism. China is Australia's single biggest trading partner and a key driver of commodity prices.
JOBLESS RISK
Yet, analysts also noted that recent domestic data pointed to a deepening recession in Australia, with unemployment in particular rising sharply to a five-year high of 5.7 percent. Official jobs data for April are due on Thursday and are expected to show a further increase to 5.9 percent.
The economy contracted by 0.5 percent in the final quarter of last year and the central bank expects it to shrink in the whole of 2009, marking its first full-year contraction since the 1991 downturn.
"Any signs that a recovery doesn't start to come through in the second half could be a trigger for further rate cuts," said ANZ's Hogan. "We are still going for 2 percent, because we're a bit concerned about the effect of rising unemployment."
Data released on Tuesday proved too mixed to provide much of a lead on policy.
Industry figures showed vehicle sales were down by a steep 24 percent in April, compared to the same month last year, as consumers shied away from big-ticket purchases.[nSYD461739]
That was still better than in the United States where vehicle sales dropped 34.4 percent in April, the lowest in almost three decades, but still a sign of soft consumption.
A survey of Australia's service sector showed activity had contracted for a 13th straight month, though the pace eased in April as new orders improved [nSYD499804].
Approvals to build new homes rose a firmer-than-expected 3.5 percent in March, the government reported. That came on top of an 8 percent jump in February, suggesting low lending rates were at least helping to stabilise housing investment.
However, conditions were tougher in the commercial property sector of shopping malls, offices and the like. There the value of approvals dropped 9.8 percent in March, to be down by fully a third from the same month last year. "Today's pick-up in residential approvals provides some further hope than we have hit the 'bottom' in the housing cycle," said George Tharenou, an economist at UBS.
"But non-residential approvals continue to point to coming weakness in this sector," he added. "We still expect the RBA to continue to cut rates to 2 percent over coming months to stimulate activity." (Editing by Tomasz Janowski)