* Energy index marks highest close in 2-1/2 weeks
* Two of Big Four banks close higher
* Tech stocks, miners limit gains on benchmark (Updates to close)
By Nikhil Subba
July 23 (Reuters) - Australian shares closed slightly higher on Thursday, propped up by the energy sector, after industry heavyweight Santos Ltd's STO.AX better-than-expected quarterly production report, even as investors were poised between the bulls and the bears.
The S&P/ASX 200 index .AXJO edged 0.3% higher to 6,094.50 at the close of trade, following a 1.3% gain on Wednesday.
Santos, the country's second-largest independent gas producer, finished 3.5% higher, its highest close since June 10, after it reported a record 18.6% rise in quarterly production. helped the energy sector .AXEJ rise 1.2% to close at its highest since July 6.
Meanwhile, Treasurer Josh Frydenberg said on Thursday the national budget was set to plunge into its biggest deficit since World War Two this year, as the coronavirus crisis knocks Australia into its first recession in three decades. government budget update today was pretty much in line with what most economists were talking about. So although it's a big number, it's kind of been a non-factor," said Henry Jennings, senior analyst at Marcus Today Financial.
"It's a bit two steps forward, one step back at the moment as we head in towards reporting season, which of course will be the big test for some of the valuations."
Financial stocks .AXFJ rose 0.18% led by QBE Insurance Group Ltd QBE.AX , up 4.07%, followed by Perpetual Ltd PPT.AX gaining 3.69%.
Among the Big Four banks, Westpac Banking Corp WBC.AX and National Australia Bank Ltd NAB.AX finished higher, while the other two closed in the red.
Technology stocks .AXIJ fell 0.47% led by Nearmap Ltd NEA.AX , down 3.61%, followed by TechnologyOne Ltd TNE.AX losing 2.31%.
ASX 300 metals and mining index .AXMM fell 0.11% led by Bellevue Gold Ltd BGL.AX , down 3.64%, followed by Ramelius Resources Ltd RMS.AX losing 2.43%.
In New Zealand, the benchmark S&P/NZX 50 index .NZ50 fell 0.25% to 11,693.4.
Top losers on the .NZ50 are Oceania Healthcare Ltd OCA.NZ , down 3.88%, followed by Tourism Holdings Ltd THL.NZ losing 3.33%.