* Banks scale back some of day's losses
* Real estate stocks rally on easier lending prospects
* New Zealand ends at second consecutive record high (Updates to close)
By Ambar Warrick
July 3 (Reuters) - Australian shares ended higher on Wednesday as large mining stocks continued to benefit from stronger commodity prices, while a surge in real estate stocks also lent support.
The S&P/ASX 200 index .AXJO rose 0.5% or 32.30 points to 6,685.50 at the close of trade. The benchmark rose 0.1% on Tuesday.
Miners BHP Group BHP.AX and Rio Tinto (LON:RIO) RIO.AX , the two heaviest stocks on the index, ended 0.1% and 0.6% higher, respectively. The two have been on a tear in recent sessions, tracking large gains in iron ore prices.
Chinese iron ore prices scaled record highs this week. IRONORE/
Goodman Group GMG.AX and Scentre Group SCG.AX , some of the largest real estate stocks in the country, closed 3.1% and 1.5% higher after an interest rate cut by the Reserve Bank pointed to easier property lending conditions.
" You have more loans, more entrants can come into the markets cause rates are so low... this should slightly recover the property market," said Dale Raynes, associate director at CPS Capital, while noting that the local property market was "pretty flat" at the moment.
Financial stocks .AXFJ ended slightly higher after the big four banks scaled back some of their losses. The stocks had dropped in the face of stricter lending conditions being proposed by the securities regulator, while many perceived that lower rates would crimp the banks' margins.
However, there was also an upside to the lower rates, as noted by Raynes, who said "the banks are notoriously bad at passing down rates, and they can sometimes absorb the extra margin, which could be viewed as positive for the banks."
Raynes also noted that cheaper lending in the country could push up lending volumes with more entrants to the market.
For the day, National Australia Bank NAB.AX closed 0.5% higher, while the other three of the big four edged lower.
On the other hand, energy stocks .AXEJ shed 2.2% after oil prices plunged overnight. Woodside Petroleum WPL.AX , the largest oil and gas stock on the ASX 200, closed 2.4% lower.
New Zealand stocks closed at a second consecutive record high, although gains appeared to be running out of steam.
The benchmark S&P/NZX 50 index .NZ50 rose 0.1% or 12.490 points to finish the session at 10,544.430.
The country's largest listed electricity retailer, Meridian Energy MEL.NZ , shed 1%, while index heavyweight a2 Milk ATM.NZ closed up 2.5%.