(Reuters) - Australian shares advanced on Thursday led by financial sector stocks as data showing unemployment at its highest in a year reinforced expectations of more central bank stimulus.
The S&P/ASX 200 index <.AXJO> ended about 0.5% or 32.4 points higher at 6,714.50 by 0539 GMT. The benchmark shed 0.2% on Wednesday.
The jobless rate rose to 5.3% in August as more people looked for work.
Analysts at RBC Capital Markets said in a note that the data was broadly consistent with the Reserve Bank of Australia's forecasts but would add to "pressure for further rate cuts".
"We expect that a further increase in the unemployment rate 5.4% by the end of the year and subdued economic activity will force the RBA to cut interest rates to 0.5% by early next year", Ben Udy, Australia & New Zealand economist at Capital Economics said in a note.
Sentiment in broader markets was cautious, however, after a cut in U.S. interest rates was accompanied by mixed signals over the U.S. Federal Reserve's stance. Fed Chair Jerome Powell said the central bank was prepared to be "aggressive" if necessary, but signalled a higher bar to further reductions.
The Australian benchmark was helped by a near 1% gain in the finiancial sub-index <.AXFJ>, with the "big four" banks all trading higher.
Analysts have noted that lower interest rates could help big lenders reduce mortgage debts as it could lower overall cost of borrowing for home owners.
Energy stocks <.AXEJ> ended 0.4% lower, wiping out earlier gains, with oil and gas heavyweights Santos Ltd <STO.AX> and Oil Search <OSH.AX> both reversing course to close about 0.5% lower.
The mining sector <.AXMM> was dragged lower by gold stocks, after bullion prices fell in light of the U.S. Fed's mixed signals, with gold explorers Silver Lake Resources <SLR.AX> and Saracen Mineral <SAR.AX> among the top losers by the close.
Miners were also hit by lower iron ore prices, which were dragged lower by increasing supply in China, while copper prices slipped as concern about demand and economic growth dominated sentiment.
New Zealand's benchmark S&P/NZX 50 index <.NZ50> finished 0.2% or 26.2 points higher at 10,801.05, lifted by energy and healthcare stocks.
Data on Thursday showed New Zealand's economy grew at a slightly slower pace in April-June from the previous quarter, although growth was faster than analyst expectations.
(Reporting by Nikhil Subba in Bengaluru; Editing by Simon Cameron-Moore)
