* Financials near 18-mth high; health stocks hit all-time high
* "Reasonable" to expect extended period of low rates - RBA
* BHP, Rio & Fortescue drop as iron ore prices fall
(Updates to close)
By Niyati Shetty
July 25 (Reuters) - Australian shares edged towards a record high on Thursday as anticipation of global interest rate cuts buoyed financial and healthcare stocks, but heavy declines in miners limited gains.
The S&P/ASX 200 index .AXJO closed up 0.6% or 41.3 points at 6,818.0, a few notches below the record high of 6,851.50 reached in November 2007. The benchmark gained 0.8% on Wednesday.
Disappointing manufacturing activity surveys from Europe and the United States solidified hopes the European Central Bank will ease monetary policy later in the day, and for the U.S. Federal Reserve to lower rates next week. .AXFJ rose 1.1% to a near 18-month closing high with the "Big Four" lenders adding between 0.8% and 1.7%.
National Australia Bank NAB.AX ended up 1% to its highest level since August 2018.
Australian banks have been concerned about their margins after two rate cuts by the Reserve Bank of Australia this year, and with more expected going ahead, but lower U.S. rates will alleviate some of the pressure by enabling them to borrow U.S. dollars more cheaply.
Keeping in line with the global dovish rhetoric, RBA Governor Philip Lowe on Thursday said it was "reasonable" to expect an extended period of low interest rates, adding that the central bank was ready to provide further stimulus if needed. health stocks .AXHJ advanced to an all-time high as the Australian dollar eased after Lowe's speech. AUD/
Drug maker CSL Ltd CSL.AX gained 2.1% and medical devices developer Cochlear Ltd COH.AX rose 1.5%.
Energy firms .AXEJ rallied for a fifth straight session, as oil prices edged higher amid lingering Middle East tensions. O/R
The metals and mining index .AXMM , however, retreated 2% as iron ore prices extended declines on Thursday. IRONORE/
The steel marking material had slumped nearly 5% in the previous session after Brazil's Vale SA VALE3.SA won approval to resume some processing operations which were halted over concerns about the stability of its dams.
Mining giants BHP Group BHP.AX and Rio Tinto (LON:RIO) RIO.AX declined 1.8% and 4.2%, respectively, while Fortescue Metals Group FMG.AX slumped 5.5%.
Gold miner Northern Star Resources NST.AX lost 5.5% and peer Evolution Mining EVN.AX fell 2.2% as bullion prices dipped against a stronger U.S dollar. USD/
New Zealand's benchmark S&P/NZX 50 index .NZ50 closed up 0.79% or 85.74 points to 10,898.28.
Westpac Bank on Thursday forecast that the Reserve Bank of New Zealand would cut rates twice this year. product maker a2 Milk Company ATM.NZ advanced 2.7% and Fisher & Paykel Healthcare Corp FPH.NZ was up 2%.