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March 1 (Reuters) - Australian shares closed at a five-month peak on Friday as investors snapped up financials and defensive stocks, but gains were capped by losses in oil producers.
The S&P/ASX 200 index .AXJO added 0.4 percent, or 23.7 points, to close at 6,192.70. It gained 0.4 percent on the week.
Oil prices rose on Friday amid output cuts by OPEC, but surging U.S. supply and a global economic slowdown prevented crude from climbing further. O/R
Energy stocks dropped more than 1 percent, with sector heavyweights Woodside Petroleum WPL.AX and Oil Search OSH.AX declining 1.6 percent and 1.9 percent respectively.
Transport fuel supplier Caltex CTX.AX was the index's biggest percentage loser with its 5 percent fall as the stock traded ex-dividend.
Financials, the biggest sector on the benchmark, offset weakness elsewhere to lead the market higher. Shares of Insurance Australia Group IAG.AX , up more than 3 percent to its highest close in more than three weeks, was the sector's top gainer.
The Big Four banks advanced, with Commonwealth Bank of Australia CBA.AX rising the most with a 0.5 percent gain for the day.
"I think we are seeing a preference for more peripheral players. The support we're seeing is in stocks that have been beaten up recently," said Michael McCarthy, chief market strategist at CMC Markets.
"Some of the insurance stocks had a rough time through reporting, and some investors think their shares have got to bargain levels."
Property trusts also gained as a combination of weak Chinese data and trepidation over the outcome of Sino-U.S. trade talks turned some investors towards more defensive stocks.
Meanwhile, data from China showing factory activity remained in contractionary territory for a third month pressured mining stocks .AXMM .
They fell 0.4 percent despite China's iron ore futures rising for a third consecutive session on Friday alongside steel prices, as investors banked on stronger steel demand from manufacturers and construction projects.
Rare earth minerals miner Lynas Corp LYC.AX extended its losses from Thursday and was the biggest drag on the index.
New Zealand's benchmark S&P/NZ 50 index .NZ50 edged higher supported by gains in Fisher and Paykel Healthcare Corp and Fletcher Building Ltd FBU.NZ .
The New Zealand benchmark index gained for a fourth consecutive week, up 0.5 percent at the end of Friday.