* RBA to consider cutting interest rates at June meeting
* Financials soar as regulator eases home loan lending criteria
* Australian benchmark at highest close since December 2007 (Updates to close)
By Rashmi Ashok
May 21 (Reuters) - Australian shares advanced on Tuesday, boosted by financials after mortgage rules were eased in a bid to spur borrowing and the chance of a June interest rate cut increased.
The S&P/ASX 200 index .AXJO shed early losses to rise 0.4% or 24 points to 6,500.1, hitting its highest closing since December 2007. On Monday, the benchmark surged 1.7%.
In a highly anticipated speech, RBA Governor Philip Lowe said the central bank would consider the case for lower interest rates in June, adding that a lower cash rate would support employment growth and help meet inflation targets. in a note, said "This is as clear a signal as the RBA ever delivers. We think the RBA will cut in June."
In ANZ's view, the central bank will want to see the combined impact of a rate cut, lower taxes and eased mortgage rules does before it makes another move.
Financial stocks .AXFJ surged 1.7%, helped when the Australian Prudential (LON:PRU) Regulation Authority (APRA) proposed relaxing the rules for how banks check people's ability to service home loans. rose on the expectation that the easing would boost borrowing and help combat a sustained drop in house prices and record-low credit growth.
Lowe also said the proposed easing of lending criteria by Australia's prudential regulator would be "complementary" to a rate cut, if it takes effect.
The "Big Four" banks surged. Commonwealth Bank of Australia CBA.AX gained 2% and Westpac Banking Corp WBC.AX jumped 2.7%.
Australia and New Zealand Banking Group ANZ.AX added 2.1% and National Australia Bank NAB.AX 1.5%.
The proposed easing in home-lending criteria also spurred shares of home-builders. Property developer Stockland Corporation SGP.AX surged 3.4%.
Construction materials makers Adelaide Brighton ABC.AX , James Hardie Industries JHX.AX and CSR CSR.AX were among top percentage gainers on the benchmark, rising between 3-5%.
But rising Sino-U.S. trade tensions capped gains on the index. Energy stocks .AXEJ and iron ore miners .AXMM slumped as the demand outlook turned shaky.
The tensions boosted prices of gold, a safe-haven investment in times of market turmoil, and gold stocks .AXGD soared.
Newcrest Mining NCM.AX rose 0.5% and Northern Star Resources NST.AX gained 2.3%.
New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.2% or 18.06 points to finish at 10,216.09.
Dairy firms Synlait Milk SML.NZ fell 1.9% while a2 Milk Company ATM.NZ shed 0.7%. (Editing by Richard Borsuk)