By Geo Tharappel
Jan 27 (Reuters) - Financial shares led gains on the Australian stock market on Friday as trading resumed after a holiday, while materials were dragged down by lower base metal and gold prices.
As the market was closed for Australia Day on Thursday, investors played catch-up after the Dow Jones Industrial Average topped 20,000 for the first time on Wednesday. S&P/ASX 200 index .AXJO was up 0.7 percent, or 38.786 points, to 5,710.3 at 0159 GMT, and was on track to rise 1 percent for the week - which would be its first advance in three weeks.
"We are catching up with that respectable rally of Wall Street," said Paterson Securities economist Tony Farnham.
Wall Street held steady on Thursday. .N
Australia's financial stocks have rallied since Donald Trump's election victory, with investors betting fiscal stimulus and deregulation will trigger inflation and stoke a rise in interest rates.
The financial index .AXFJ gained as much as 1.6 percent, with the "Big Four" banks leading gains.
"Combination of local investors less nervous about the outlook for banks... and offshore interests from a currency perspective who have to find some way to invest those funds is pushing up local financials," Farnham said.
Westpac Banking Corp WBC.AX rose as much as 2.0 percent, and National Australia Bank Ltd NAB.AX was up 2.5 percent.
Gold stocks .AXGD lost as much as 6.0 percent to hit their lowest since Jan. 5, as a strengthening dollar and improving appetite for risk assets dragged it to a two-week low. GOL/
Newcrest Mining Ltd NCM.AX , Northern Star Resources Ltd NST.AX and Evolution Mining Ltd EVN.AX were among the worst performers.
Miners .AXMM also suffered from declines in most base metal prices, especially copper. MET/L BHP Billiton (LON:BLT) Ltd BHP.AX shed more than 2 percent.
"People are worried about what is happening with global trade, particularly with Mexico, and what could potentially happen to China," said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.
The White House on Thursday floated the idea of a border tax on goods from Mexico to pay for a wall on the U.S. border, deepening tensions between the neighbours. Zealand's benchmark S&P/NZX 50 index .NZ50 was flat at 7,114.33 at 0159 GMT, with utilities and healthcare offsetting gains in telecom and industrials. The index is on track to rise for the sixth straight week.
Contact Energy Ltd CEN.NZ fell to an over 16-week low after posting a decline in December monthly sales.