* Australia benchmark set for worst weekly loss in 2 months
* Financials eke out narrow gains
* New Zealand benchmark up 0.1%
By Aby Jose Koilparambil
Dec 6 (Reuters) - Australian shares were in line to cap off a volatile week on a positive note on Friday, as market participants stayed cautious while awaiting developments in the hoped-for interim trade deal between the United States and China.
The S&P/ASX 200 index .AXJO gained 0.2% to 6,694.20 by 0015 GMT, but was set to lose about 2.5% for the week to mark its worst weekly loss in two months. The benchmark had gained 1.2% on Thursday.
Global markets have remained highly volatile this week, hit by conflicting reports on whether the world's two largest economies would be able to arrive at a "phase one" agreement prior to Dec. 15, when a new round of U.S. tariffs on Chinese imports is due to take effect.
"There was a lot of confidence last week that a deal would be done. This week, we have seen some reversal of that strong sentiment and some evidence in the activity indicators around the globe that the trade dispute is having an impact on manufacturing activity," said Michael McCarthy, chief market strategist at CMC Markets.
The heavyweight financials sub-index .AXFJ eked out narrow gains, while the mining sub-index .AXMM oscillated between gains and losses.
Commonwealth Bank of Australia CBA.AX , the country's biggest lender, gained about 0.3% while No. 3 player National Australia Bank Ltd NAB.AX firmed slightly.
However, the second-largest retail bank Westpac Banking Corp WBC.AX and Australia & New Zealand Banking Group Ltd ANZ.AX lost ground, falling 0.1% and 0.2%, respectively.
World's largest miner BHP Ltd BHP.AX gained slightly while another major diversified player, Rio Tinto (LON:RIO) Ltd RIO.AX , traded 0.2% lower.
Among sectors that were gaining, healthcare and real estate stocks advanced 0.5% and 0.3%, respectively.
Australia's biggest supplier of building materials, Boral Ltd BLD.AX , was the biggest percentage loser on the benchmark, falling more than 6%, after it identified financial irregularities in its North American windows business between September 2018 and October 2019. the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 inched up 0.1% to 11,272.76, but was set for its first weekly loss in five, albeit in a thin range.
Energy retailer Mercury NZ Ltd MCY.NX and dairy giant Fonterra FSF.NZ were the top percentage gainers on the benchmark, tacking on more than 2% each.