* Financial stocks poised to fall for sixth straight day
* Westpac’s FY profit drops 15%
* Miners, energy stocks rise
By Shriya Ramakrishnan
Nov 4 (Reuters) - Australian shares rose on Monday as signs of headway in Sino-U.S. trade talks supported risk appetite, but the heavyweight banking sector extended losses after weaker results from the country’s second-largest lender, limiting gains for the benchmark.
The S&P/ASX 200 index rose 0.2% or 15.9 points to 6,685 by 0036 GMT. The benchmark ended marginally higher on Friday.
Financial shares, the benchmark’s largest component, slipped 0.8% and were poised for a sixth straight day of declines. Commonwealth Bank of Australia, the country’s largest lender, fell 1.4%, while National Australia Bank , which is set to report results on Thursday shed 2.9%.
Westpac Banking Corp on Monday reported a 15% slide in full-year cash earnings and cut its dividend for the first time in a decade, as it also set aside more money to meet compliance and compensation costs.
Trading in the lender’s shares was halted until Nov. 5 to allow for the pricing process for a new share issue.
“Westpac’s results has really upset the market in the banking space,” Brad Smoling, managing director at Smoling Stockbroking said.
“The provision from remediation as a resolve to the Royal Commission is being quite impactful on the banking sector and if we do get a rate cut from the Reserve Bank of Australia tomorrow that is going to put further pressure on the margin for bank profitability.”
Australia’s central bank is expected to hold its cash rate at a record low of 0.75% at its policy review on Tuesday, but cut it at least once more early next year to help revive inflation and a slowing economy, according to a Reuters poll.
Positive developments in the U.S.-China trade war front and stronger-than-expected economic data from both countries supported gains in other sectors.
The United States and China on Friday said they made progress in talks aimed at defusing a nearly 16-month-long trade war, while U.S. officials said a deal could be signed this month.
Mining stocks were the top performers in early Monday trade, with the sub-index jumping 1.8% to its highest level in nearly a month. The sector is especially vulnerable to developments on the trade front, with China being a key buyer of commodity exports.
Global miners BHP Group and Rio Tinto advanced 2.1% and 3.5%, respectively.
“When the market sees that there is some progress, it grabs that with both hands on hopes that things will turn out well, but I am not too convinced by that...I think it just ‘hopium’,” Smoling added.
Strength in global crude prices lent support to energy stocks, which rose 0.7% to a more than 1-month high. Woodside Petroleum , the country’s largest oil and gas explorer, added 0.8%, while Oil Search gained 1%.
New Zealand’s benchmark S&P/NZX 50 index rose 0.7% or 70.58 points to 10,832.49.
Electricity retailers Contact Energy and Meridian Energy were among the top gainers, rising 2.8% and 2.1%, respectively.
Reporting by Shriya Ramakrishnan in Bengaluru, Editing by Kim Coghill