Australian shares post best day in a month on Russia-Ukraine hopes

March 10 (Reuters) - Australian shares closed higher on Thursday as banks and technology stocks rallied amid hopes of some headway in Russia-Ukraine diplomatic talks, although the gains were capped by mining and energy stocks.

The S&P/ASX 200 (.AXJO) ended 1.1% higher at 7,130.80, its best session since Feb. 9. The benchmark rose 1% on Wednesday.

Russia's foreign minister Sergei Lavrov arrived in Turkey ahead of planned talks on Thursday with his Ukrainian counterpart Dmytro Kuleba. read more

Brad Smoling, managing director at Smoling Stockbroking, said market sentiment was supported by "the prospects of a peaceful ending (to the Russia-Ukraine conflict) and the fact that oil is starting to come down, not continuing to rise."

Financials (.AXFJ) led gains on the local bourse, climbing 2.8% to notch their best session in over a year. The country's four largest lenders gained between 2.4% and 3.5%.

Technology stocks (.AXIJ) jumped 3.3%, tracking an overnight surge in the tech-heavy Nasdaq index (.IXIC) that rebounded from several days of falls.

Australia-listed shares of Block Inc. added 7.1%, while Computershare (CPU.AX) rose 3.7%.

Bucking the trend, the mining index (.AXMM) dropped 2.2% on weak iron ore prices, with Rio Tinto (RIO.AX), Fortescue Metals Group (FMG.AX) and BHP Group (BHP.AX) slipping between 1.5% and 7.7%.

Rio Tinto marked its worst day since May 2016 as the global miner traded ex-dividend. The company also said it was in the process of ending all commercial relations with Russian businesses. read more

Energy stocks (.AXEJ) declined 2.5% as global oil prices fell most in nearly two years overnight after OPEC member the United Arab Emirates supported pumping more oil into a market roiled by supply disruptions.

Woodside Petroleum (WPL.AX) and Santos (STO.AX) slumped 4.7% and 2.4%, respectively.

New Zealand's benchmark S&P/NZX 50 index (.NZ50) rose 1.2% to 11,926.26, marking its best session since March 1.

Construction firm Fletcher Building (FBU.NZ) and Air New Zealand (AIR.NZ) gained 4.6% and 4.4%, respectively.

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