* Mining stocks set for 4% weekly gain
* Lynas jumps 6.8% on plan to submit plant tender to U.S. army
* NZ's Z Energy plunged 17% on FY earnings downgrade
By Niyati Shetty
Dec 13 (Reuters) - Australian shares rose on Friday, with metals and mining stocks jumping to a four-month high, after sources said the United States and China reached a "phase one" trade deal in principle.
The S&P/ASX 200 index .AXJO gained 0.4%, or 29.70 points, to 6,738 by 0058 GMT. The benchmark fell 0.7% in the previous session, but was on track to end higher for the week.
"Risk assets have predictably surged, and those investors who were holding on to trade deal premiums were hugely rewarded for their patience as Dec. 15 hedges unwound, and negative equity market bets are getting stopped into trades," said Stephen Innes, chief Asia market strategist at AxiTrader.
While the U.S. agreed to reduce some tariffs on Chinese goods and delay a tranche of Dec. 15 tariffs, China also has agreed to make $50 billion in agricultural purchases in 2020 as part of the deal, sources told Reuters. metals and mining stocks .AXMM gained as a trade deal would help provide relief to top metals consumer China's slackening growth. The sub-index was on track for a 4% weekly gain, the highest since mid-June.
Global mining giants BHP Group Ltd BHP.AX and Rio Tinto (LON:RIO) RIO.AX jumped 2% and 1.6%, respectively. Iron ore miner Fortescue Metals Group FMG.AX gained as much as 2.8%, its highest since July 2008.
Financials .AXFJ added 1.3%, with three of the country's "Big Four" banks rising between 1.5% and 2.2%.
The country's biggest lender Commonwealth Bank of Australia CBA.AX , however, recorded limited gains of 0.3% after it flagged additional payments to underpaid employees. energy sub-index .AXEJ was buoyed by Woodside Petroleum Ltd WPL.AX and Santos Ltd, adding 0.7% and 0.9%, respectively.
Oil prices had risen overnight on hopes that the trade deal would ease concerns over the global crude demand. O/R
Lynas Corp LYC.AX jumped as much as 6.8% after it said it would submit a compliant tender in response to the U.S. Department of Defense's call for proposals to build a heavy rare earths separation plant in the United States. gold miners .AXGD tumbled 2.4% as the safe haven metal lost its shine after risk sentiment improved. GOL/
Sector heavyweight Newcrest Mining Ltd NCM.AX lost 1.8% and Evolution Mining EVN.AX fell 3.9%.
New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.5%, or 53.71 points, to 11,254.27.
Manufacturing activity in the country expanded at a slower pace in November, a survey showed on Friday. retailer Z Energy Ltd ZEL.NZ plunged up to 17.3% and was the worst performer on the bourse after cutting annual earnings outlook citing low refining margins.