(Adds analysis, quotes, stocks on the move)
SYDNEY, March 7 (Reuters) - Australian shares edged higheron Friday morning on the back of gains on Wall Street, butinvestors tiptoed cautiously amid the backdrop of tensions inUkraine and ahead of a crucial U.S. jobs report.
Most sectors were up modestly, with gold and oil stocksleading the way as markets kept a watch on diplomatic efforts toresolve the Ukraine crisis.
Australia's top oil and gas producer Woodside Petroleum Ltd (Other OTC: WOPEF - news) climbed 0.6 percent and Santos Ltd jumped 1.3percent after U.S. oil rose as traders reconsidered thegeopolitical risks of Russia's intervention in Crimea.
On the whole, it was a quiet early session with 154.1million shares changing hands compared to a daily moving averageof 597 million so far in 2014.
"The market's very quiet, there's low volumes, there'sreally no lead out there," said Shawn Hickman, managing directorat Market Matters in Sydney.
"To a certain degree, our market started off weak withwhat's been happening in the Ukraine and Russia and it's justhaving a rest ahead of the weekend."
The S&P/ASX 200 index added 13.8 points, or 0.3percent, to 5,459.7 by 0120 GMT, hovering near 5-1/2 year highsof 5,461.7 touched on February 25. At the current level, thebenchmark is up 1 percent for the week.
U.S. stocks mostly rose on Thursday, with the S&P 500closing at yet another record on better-than-expected joblessclaims data and the European Central Bank's move to keep ratesunchanged.
Friday's session got off to reassuring comments from theAustralian central bank chief.
Reserve Bank of Australia Governor Glenn Stevens, in histwice-yearly parliamentary testimony, said that record lowinterest rates were helping the economy transition away frommining-led growth as well as can be expected and plotted asteady trajectory for monetary policy.
The financial sector was the biggest drag on the market,with all 'Big Four' banks falling. Westpac Banking Corp dropped 1 percent and National Australia Bank lost 0.4percent. Market Matters' Hickman said some investors wereswitching into resources from the banking sector, noting thatthe likes of Westpac was becoming pricey after racing tofour-month highs earlier this week
Liquefied Natural Gas Ltd soared 11.8 percent to3-1/2 month highs of A$0.43 after the U.S. Department of Energyauthorised its Magnolia project to export to free tradeagreement countries.
Global miner Rio Tinto Ltd (Xetra: 855018 - news) pledged onThursday to press ahead with finalising an investment frameworkfor the long-delayed Simandou iron ore project. Shares in Riowere up 1.2 percent.
New Zealand's benchmark NZX 50 index rose 0.1percent to hover at all-time highs of 5,120.5, underpinned by animproving economy.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)
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