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Australian shares rise led by financials; NZ slips

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[BENGALURU] Australian shares firmed on Monday, led by a rally in banks, supplemented by materials stocks gaining thanks to stronger commodities prices.

The S&P/ASX 200 index rose 0.4 per cent or 24.9 points to 5,893.7 by 0306 GMT. The benchmark declined 0.2 per cent on Friday.

Financial stocks rose 0.8 per cent, brushing aside concerns that Australia's competition watchdog wants to increase penalties imposed on the 'Big Four' major banks to "hundreds of millions".

Banks, which account for nearly half the index, have fallen about 7 per cent since the beginning of the year as a judicial inquiry into the financial sector has exposed widespread misconduct and regulatory shortcomings.

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"There has been a sell down quite dramatically already and while we have seen a bounce back from that level, there might be some speculation whether or not they (the authorities) will be able to enforce such strong penalties," said Dale Raynes, Associate Director at CPS Capital.

Mr Raynes said the proposed heavy fines may be enforced and followed by job cuts, but the wider industry would survive. This would encourage "bottom fishers" to buy high-dividend stocks when their share prices are very low.

Commonwealth Bank of Australia, gained 0.8 per cent, having shed nearly US$10 billion from its market value since the turn of the year.

Riding the broader sentiment in the sector, Australia and New Zealand Banking Group also gained.

The lender said it would book a loss of A$632 million (S$637.37 million) in its half-year results on last year's divestment of two of its wealth businesses, which didn't come as a surprise as the loss had been flagged before.

Westpac Banking Corp climbed 1.1 per cent, while Macquarie Group Ltd rose 0.9 per cent to its highest since March 22.

Materials stocks also traded higher, with the Australian metals and mining index jumping 0.9 per cent, underpinned by stronger prices for iron ore.

BHP, the world's largest miner, rose 1.2 per cent to its highest in almost two months. On Friday a Brazilian court postponed to June 25 the deadline for BHP produce a compensation plan for victims of the 2015 Samarco mine disaster.

A dam at the Samarco iron ore mine, jointly owned by Vale and BHP, collapsed in 2015, killing 19 people.

Newcrest Mining strengthened 2.6 per cent to a six-week high. The gold miner said the first 200 metres of its Cadia Hill mine's open pit been approved for use as a tailings storage facility. The flagship mine restarted processing earlier this month.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index ticked down 0.2 per cent to 8,304.3.

Dairy firm a2 Milk Company Ltd fell 3.2 per cent, accounting for most of the losses on the benchmark.

REUTERS