* Benchmark gains 0.5 pct for the day, 1.8 pct this week
* Signs of progress in Sino-U.S. talks lift sentiment
* NZ benchmark takes gains for 3rd consecutive session (Updates to close)
Jan 18 (Reuters) - Australian shares rose for a fourth consecutive day on Friday, scaling fresh two-month peaks as renewed hopes for progress in resolving the U.S.-China trade war boosted risk appetites.
The S&P/ASX 200 index .AXJO closed 0.5 percent or 29.5 points up at 5,879.60, advancing 1.8 percent for the week, its second consecutive weekly gain. The benchmark had risen 0.3 percent on Thursday.
The U.S stocks rallied after Wall Street Journal reported that U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during talks scheduled for Jan. 30.
The Wall Street shares pared some of those gains after a Treasury spokesperson told CNBC that Mnuchin had not made any such recommendations.
However, even the whiff of progress in the trade war helped boost sentiment, with Australia gaining along with its Asian peers.
Financial stocks .AXFJ , which account for nearly half the benchmark, advanced for a fifth session, climbing.
All the 'Big Four' banks firmed between 0.3 percent to 0.6 percent, with biggest lender Commonwealth Bank of Australia CBA.AX gaining the most.
The metals and mining sector .AXMM rose 0.7 percent and had its highest close since Oct. 5.
London copper prices rose for a fourth straight session, hitting their highest level this year, and prices of steel and steel-making raw materials in China firmed with iron ore climbing to a more than 10-month peak.
Mining giant and index heavyweight Rio Tinto (LON:RIO) RIO.AX gained 0.3 percent after its 2018 iron ore shipments from Australia's Pilbara region rose 2 percent and it set a higher target for 2019. Group BHP.AX gained 0.7 percent. It will report second-quarter production next week, as will oil and gas players Oil Search OSH.AX and Santos STO.AX . Resource stocks are the second largest sector on the benchmark.
The ASX Information Technology sub-index closed 1.7 percent higher with Afterpay Touch Group APT.AX logging a 13 percent surge as the payment service provider's underlying sales in the first half topped A$2.2 billion ($1.58 billion).
New Zealand's benchmark S&P/NZX 50 index .NZ50 advanced for the third straight session, ending 0.2 percent or 19.90 points higher at 9,097.71> It rose 1.5 percent this week.
Software billing firm Gentrack Group Ltd GTK.NZ and entertainment company Sky TV SKT.NZ were the benchmark's top percentage gainers on the benchmark, both putting on more than 2 percent. ($1 = 1.3912 Australian dollars)