[BENGALURU] Australian shares rose on Thursday after TPG Telecom and Vodafone Group's local unit agreed to merge in a shake-up of the telecom sector, though weak financials trimmed the gains.

Telecom stocks boosted the S&P/ASX 200 index, up 0.2 per cent, or 12.10 points to 6,364.3 at 0200 GMT. The index rose 0.8 per cent rise on Wednesday.

The merger between TPG Telecom and Vodafone Group's local unit, Hutchison Telecommunications (Australia) would create an entity with an enterprise value of A$15 billion (S$14.93 billion).

The deal will ramp up competition with bigger rivals like Telstra and Optus.

TPG shares soared over 22 per cent as the top gainer on the index, while Vodafone's Hutchison, a joint venture with CK Hutchison Holdings, catapulted as much as 76 per cent at one point. Telstra was up 2.4 per cent.

"This is going to lead to a decrease in competition for Telstra and either way the market is embracing a sector that has been in the doghouse for a while," said James McGlew, executive director of corporate stockbroking at Argonaut.

"It just shows you how contrarian markets can be at times."

Financial stocks, which account for over one-third of the benchmark, were in the red.

Westpac Banking fell 0.6 per cent, trimming some of its 2.7 per cent surge on Wednesday after it became the first major lender to raise key mortgage rates in an effort to preserve profit margins.

Westpac's decision lays open the field for its 'Big Four' peers, which together control about 80 per cent of Australia's deposit and home loan markets. The move also sparked speculation the central bank will be forced to keep policy accommodative to offset such rate increases.

A more than one per cent rise in oil prices overnight saw Brent settle over US$77 per barrel, its highest in seven weeks. However, drops in Santos and Origin Energy capped the gains.

Carnarvon Petroleum announced on Thursday that its Dorado oil find is estimated to hold 171 million barrels of light oil reserves, making it the third biggest oil find off Western Australia. Eighty per cent of the field is owned by Quadrant Energy, which is set to be taken over by Santos.

A day after hitting record highs, New Zealand's benchmark S&P/NZX 50 index slipped 0.2 per cent to 9,342.96.

The stock market's operator, NZX Ltd, lost over 4 per cent, while Spark New Zealand Ltd fell about one per cent.

REUTERS