* Aussie shares close in red for third consecutive session
* Financials biggest drag on the benchmark
* NZ declines on slump in consumer staples
(Updates to close)
May 21 (Reuters) - Australian shares closed flat on Monday as losses in materials and banking stocks offset positive sentiment stemming from easing U.S.-China trade tensions, while the healthcare index rose to a record high on an extended rally in CSL Ltd.
The S&P/ASX 200 index .AXJO fell 2.90 points to 6,084.5 at the close of trade. The benchmark declined 0.1 percent on Friday.
Banks fell, dragging on the benchmark. Top lender Commonwealth Bank of Australia CBA.AX declined 0.6 percent to its lowest since Sept. 2016, while Westpac Banking Corp WBC.AX dipped 0.7 percent to a three-week low.
Materials stocks also traded lower as China's Dalian iron ore futures fell more than 3 percent. IRONORE/
Global miner BHP BHP.AX slipped 0.4 percent and rival Rio Tinto (LON:RIO) Ltd RIO.AX slid 0.9 percent.
But biotherapeutics developer CSL Ltd CSL.AX rose to its highest level ever after raising its annual profit outlook on Friday. sentiment from CSL spilled over to the broader sector, with the Australian healthcare index .AXHJ rising 1.4 percent to a record high.
In New Zealand, the benchmark S&P/NZX 50 index .NZ50 fell 0.5 percent or 41.61 points to finish the session at 8,615.72.
Consumer staples led the decline, with heavyweight a2 Milk Company Ltd ATM.NZ dipping 2.3 percent, while Comvita Ltd CVT.NZ slumped 8 percent to a nine-month low.
Health products producer Comvita said that talks with an unnamed third party for a possible takeover of the company have ended without a deal due to a "considerable distance" between the parties on price.