* Banks post lowest close in over 1-1/2 years
* Gains in telecom stocks limit decline
* NZ closes at record high (Updates to close)
June 14 (Reuters) - Australian shares closed slightly lower on Thursday, dragged by banks while telecom stocks held the fort after Australia kept Chinese telecom giant Huawei Technologies Co Ltd out of internet cabling for the Solomon Islands.
Investors looked past the U.S. Federal Reserve's rate hike to the European Central Bank's policy meeting later on Thursday for mention of any intention to end a massive bond purchase programme by the end of this year. was also on the Bank Of Japan's two-day monetary policy meeting that ends on Friday. data showed China's economy finally started to cool under the weight of a multi-year crackdown on riskier lending that is pushing up borrowing costs for companies and consumers. S&P/ASX 200 index .AXJO declined 6.9 points, or 0.1 percent, to 6,016.6 after a 0.5 percent drop in the previous session.
Financial stocks .AXFJ closed at their weakest since November 2016. Moody's Investors Service said the ongoing inquiry by Royal Commission into the financial sector had potential profit implications. are under stringent regulatory scrutiny after multiple cases of misdemeanour were revealed by a powerful inquiry into the sector .AXFJ which has lost about 7.4 percent since hearings commenced in February.
Telstra Corp TLS.AX , the country's top telecom operator, rose 5.1 percent, making it the biggest boost to the main board.
Australia has agreed to fund underwater internet cables and a cyber security centre for the Solomon Islands, forestalling plans by Huawei Technologies that could have compromised Australian internet security. stocks such as BHP Billiton (LON:BLT) BHP.AX and Rio Tinto (LON:RIO) RIO.AX also performed well, gaining 0.4 percent and 0.6 percent, respectively.
New Zealand's benchmark S&P/NZX 50 index .NZ50 closed at a record high. It rose about 1 point to 8,978.18 and marked its seventh session of gain in eight.
Healthcare stocks were the best performers.
Fisher & Paykel Healthcare Corporation FPH.NZ gained 1.8 percent, rising for an 11th straight session to a record closing high.