Australia shares underpinned by banks; Karoon Gas rockets 40 pct

Reuters - UK Focus

* Karoon Gas surges on news to sell stake in Browse Basin

* Miners continue to fall as iron ore slumps (Adds analysis, quotes, stocks on the move)

By Thuy Ong

SYDNEY, June 2 (Reuters) - Australian shares clawed higheron Monday, buoyed by another record close on Wall Street, withstrength in banks like Commonwealth Bank of Australia (Other OTC: CBAUF - news) helping offset losses in miners.

Karoon Gas Ltd soared over 40 percent to afour-month high on news it will sell its stake in PoseidonBrowse Basin assets to Origin Energy Ltd for up to $800million. Origin Energy (Frankfurt: ORL.F - news) dropped 3.3 percent.

The S&P/ASX 200 index was up 0.2 percent or 18.5points at 5,511.0 at 0237 GMT, after losing 0.5 percent onFriday.

Market moves were modest as investors awaited economic datadue in the coming days including retail sales, gross domesticproduct and the trade balance, traders said.

"It's somewhat an anticipation of some of the numbers outthis week that may be market moving," said Kara Ordway, marketmaker and trader at City Index in Sydney.

"We're coming into the end of financial year at the moment,so occasionally we'll see some falling around that time in localmarkets but at the moment global markets are looking reallystable," she added.

The local benchmark hit a near six-year high of 5,554.5 onApril 29, but has traded mostly sideways since, as a slump iniron ore prices has hit index-heavyweight resource stocks.

Iron ore fell another 4 percent on Friday and dropped for asixth straight month in May, its longest losing streak onrecord, due to a supply glut.

In the mining sector on Monday, BHP Billion Ltd lost 1.5 percent and Rio Tinto Ltd (Xetra: 855018 - news) shed 0.6 percent.

But the market found support from gains in the Big Fourbanks, which have drawn strong demand for their relatively highyields.

Commonwealth Bank of Australia added 0.8 percent, Australiaand New Zealand Banking Group rose 0.6 percent andNational Australia Bank gained 0.8 percent.

Sai Global Ltd rose 2.2 percent to a two-year highof A$5.23 after the risk management and standards firm said ithas been approached by a number of parties expressing interestin its business.

New Zealand markets were closed for the Queen's Birthdayholiday. (Editing by Chris Gallagher)

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