(Reuters) - Australian shares closed higher on Thursday, led by financials, as signs of a de-escalation in the Sino-U.S. trade dispute lifted risk sentiment, while investors hoped the European Central Bank (ECB) will dole out stimulus measures.
The S&P/ASX 200 index <.AXJO> advanced 0.3% to 6,654.90 at the close of trade. The benchmark closed 0.4% higher on Wednesday.
In a symbolic gesture, U.S. President Donald Trump agreed to delay an additional hike in tariffs on Chinese goods due in October by two weeks, after China announced tariff exemptions for a basket of U.S. goods, just ahead of fresh talks scheduled for early October.
There are "rising hopes that the upcoming U.S.-China trade talks will be off to a good start with the recent de-escalating moves," OCBC analysts said in a note to clients.
The ECB is widely expected to announce a rate cut and monetary stimulus, following its meeting later in the day, as a precursor to advent global quantitative easing.
Financial stocks <.AXFJ>, which constitute over one-third of the domestic benchmark, climbed 0.3% to their highest in nearly six weeks.
"Any glimpse of peace in the U.S.-China trade war can be explained as a positive for equities, including the banks," said Marc Kennis, principal of Pitt Street Research.
All the "Big Four" banks inched upward, with the country's largest lender Commonwealth Bank of Australia <CBA.AX> ending the session almost 1% firmer at a 5-1/2-week high.
In the mining space, iron ore miner Fortescue Metals' <FMG.AX> 2.2% climb provided much boost to the industry index <.AXMM>, which advanced 0.5%.
The rise was fuelled by higher iron ore prices, which increased to a five-week peak, in anticipation of some restocking demand for the steelmaking raw material ahead of holidays in China.
Local gains on the benchmark were capped by a 1.3% fall in the energy index <.AXEJ>, with Whitehaven Coal Ltd <WHC.AX> down 3.7% at close, and oil and gas company Woodside Petroleum <WPL.AX> ending about 2% lower.
Technology stocks <.AXIJ> erased earlier gains to finish marginally lower. Data solutions provider Appen Ltd <APX.AX> ended 2% lower, while software maker Bravura Solutions Ltd <BVS.AX> slid nearly 6% to close at a near three-week low.
New Zealand's benchmark S&P/NZX 50 index <.NZ50> dipped 0.2% to finish the session at 10,905.06, with fuel retailer Z Energy Ltd <ZEL.NZ> and Synlait Milk <SML.NZ> as top losers.
Synlait Milk shares ended almost 10% lower after the dairy processing company's annual net profit fell short of expectations as a revised pricing deal with its branding partner A2 Milk resulted in lower margins.
(Reporting by Nikhil Subba in Bengaluru, Editing by Sherry Jacob-Phillips)
