Jan 28 (Reuters) - Australia shares erased early gains to trade modestly higher on Friday, pressured by gold stocks, as investors scoured for battered stocks that entered correction territory in the previous session on the U.S. Federal Reserve's hawkish stance.

The S&P/ASX 200 index was up 0.3% at 6,856.30, as at 2348 GMT, after advancing as much as 1.9% earlier in the day. The benchmark declined 1.8% on Thursday, and is now more than 10% below its August 2021 high.

The index was on track to lose more than 7% in January, its worst month since March 2020.

The Fed said on Thursday it would likely raise interest rates in March and begin tapering bond purchase programme in the same month.

Investor focus is now at a meeting by the Reserve Bank of Australia due next week, where the central bank is expected to end its bond-buying programme but might wait until November to make its first interest rate hike in over a decade, a Reuters poll showed.

Australian miners added as much as 2% on Friday as iron ore prices crept up on hopes of robust demand for the steel-making ingredient in China.

Heavyweights BHP Group, Rio Tinto and Fortescue Metals Group gained more than 3% each.

Healthcare stocks advanced as much as 2.1% to mark their biggest intraday jump in nearly six weeks. Biotech giant CSL Ltd gained 3%.

However, a 4% drop in local gold miners limited the gains in the benchmark, as bullion slid more than 1% overnight after the greenback rallied on robust U.S. economic data, which would strengthen the case for faster rate hikes.

Newcrest Mining slumped 4.1% to its lowest since late-September as its quarterly gold output fell from year-ago levels while the top Australian gold producer also flagged weather issues and Omicron-led headwinds at its Lihir mine in Papua New Guinea.

New Zealand's benchmark S&P/NZX 50 index was down 0.3% at 12,008.43, hovering near its lowest since Feb. 26 last year.

(Reporting by Sameer Manekar in Bengaluru; Editing by Sherry Jacob-Phillips)