* Banks extend losses on warnings of tighter regulations
* Vocus ends 17% higher after $2.27 bln takeover bid
* Air NZ erases gains to end down, cuts 2019 earnings outlook (Updates to close)
May 27 (Reuters) - Australian shares ended flat on Monday as weakness in banks was offset by gains in mining stocks, with global miner Rio Tinto (LON:RIO) ending at its best level in over a decade.
Sentiment toward miners was helped by comments from Chinese Premier Li Keqiang that boded well for demand for industrial metals from Australia's main export market. Li said China would look to keep value-added tax low for the manufacturing industry to boost the economy.
Mining major Rio Tinto RIO.AX finished 1.8% higher, while rival BHP Group BHP.AX added 1.3%.
The S&P/ASX 200 index .AXJO closed 4.1 points lower at 6,451.9, its third straight session in the red, though activity was subdued due to market holidays in London and New York.
Telcos were in the spotlight as Vocus Group Ltd VOC.AX received a A$3.27 billion ($2.27 billion) takeover offer from a private equity firm. Shares ended 17% higher at an over 2-year best.
TPG Telecom TPM.AX also rose 4% after taking the anti-trust regulator to court on Friday over its move to block TPG's merger with a local joint venture of Vodafone (LON:VOD).
Telecom heavyweight Telstra TLS.AX , whose shares had risen when its competitors' merger was stalled, dropped 2.5%. on the other hand, lost 0.5%, with the "Big 4" giving up between 0.1% to 0.7%. The financial sub-index has fallen for four straight sessions since Australia's financial regulator on Wednesday warned banks may face stricter external scrutiny and higher capital requirements unless they improved internal oversight. Zealand's benchmark S&P/NZX 50 index .NZ50 was 0.7%, or 74.65 points, lower to 10,147.71, dragged by healthcare stocks such as Fisher & Paykel Healthcare Corp FPH.NZ , which fell 3.5%.
Air New Zealand Ltd AIR.NZ shares erased earlier gains to end 0.4% lower after cutting 2019 earnings expectations. Earlier in the day, the national carrier said it ordered eight Boeing (NYSE:BA) Co BA.N 787-10 Dreamliner jets worth $2.7 billion at list prices. = 1.4428 Australian dollars)