* Australian shares set for third straight session of gains
* Utilities lose amidst stronger risk appetite
* New Zealand scales over 3-mth high
By Ambar Warrick
Jan 17 (Reuters) - Australia's benchmark share index rose to its highest level in more than two months on Thursday on stronger financials and materials, though investors held off on making big bets ahead of a slew of production reports by major resource companies.
The S&P/ASX 200 index .AXJO rose 18.2 points or 0.3 percent to 5853.4 by 0010 GMT, and was on track for its third straight session of gains. It rose 0.4 percent on Wednesday.
Financial shares moved higher in tandem with their Wall Street peers, which rose overnight on a series of strong earnings report. The big four banks of Australia rose in a range of 0.4 percent to 1.2 percent.
Kyle Rodda, market analyst with IG Markets, said that considering the sell-down seen through December and early January, the robust earnings seen in U.S. banks implied that the financials sector was not in as bad a place as initially perceived.
But he noted that expectations had been very low for the banks.
Australia's financial sub-index .AXFJ scaled a near 1-1/2 month high.
The metals and mining sector .AXMM rose about 0.5 percent, bolstered mainly by diversified miner South32 S32.AX after its second-quarter coking coal output nearly doubled. The stock rose about 2.3 percent. Petroleum WPL.AX pushed up the energy sector with a 1 percent rise after its quarterly revenue surged. However, the company flagged higher-than-expected investment costs for 2019, owing to its ambitious expansion plans over the next decade. Coal WHC.AX gained more than 3 percent after its second-quarter coal production rose 11 percent. The stock was also among the biggest boosts to the energy index. stocks are the second largest sector on the benchmark. Mining giant BHP Group BHP.AX is set to report second-quarter production next week, along with oil and gas players Oil Search OSH.AX and Santos STO.AX . Rio Tinto (LON:RIO) RIO.AX will report its quarterly production on Friday.
The utilities sector was the biggest loser for the day, with gas and electricity supplier AGL Energy AGL.AX shedding more than 2 percent.
"We've seen a change in market behaviour recently, where there is a greater appetite for risk, and utilities get sold off in such situations," IG Markets' Rodda said, adding that the utilities sector was a defensive sector.
New Zealand's benchmark S&P/NZX 50 index .NZ50 rose about 0.6 percent or 50.73 points to 9078.17, a more than 3-month high. Consumer stocks such as Synlait Milk SML.NZ and a2 Milk ATM.NZ rose about 2.5 percent and 2 percent respectively.
Milk product makers a2 Milk and Synlait depend heavily on Chinese demand, and have seen a recent resurgence of interest amidst improving sentiment over the country.