(Adds detail, quote) WELLINGTON, June 15 (Reuters) - New...

(Adds detail, quote)

WELLINGTON, June 15 (Reuters) - New Zealand's economy grew by less than expected in the first quarter of 2017, weighed down by the construction sector and extending the sluggish growth seen at the end of last year, the statistics agency said.

The economy grew 0.5 percent in the three months to March, picking up only slightly from 0.4 in the fourth quarter of 2016, when heavy rain had hit dairy production and exports, according to Statistics New Zealand.

The number was lower than the 0.7 percent growth forecast in a Reuters poll of economists and well below the central bank's forecast for 0.9 percent growth.

Construction was down 2.1 percent quarter on quarter in first three months of the year, its first fall since June 2015. It was up 9.3 percent on the year, refelecting the strong growth seen in the sector over 2016, the statistics office said.

"Much lower building activity combined with mixed results for the service sector took the shine off higher dairy production and saw a second quarter of moderate overall GDP growth," said Gary Dunnet, national accounts senior manager at Statistics New Zealand.

On an annual basis, the economy expanded 2.5 percent in the first quarter of this year. Economists in the Reuters poll expected annual growth to remain steady at 2.7 percent.

The New Zealand dollar fell to $0.7246 from around $0.7265 from before the indicator was published, but remained close to four-month highs.