* Financials rise on bargain hunting, Telstra Corp drags
* Miner Galaxy Resources up 18 pct on $280 mln sale deal
* NZ down on consumer staples and health stocks
By Devika Syamnath
May 29 (Reuters) - Australian shares inched higher on Tuesday, supported by banks as investors hunted for bargains, though a decline in Telstra Corp TLS.AX capped gains.
The S&P/ASX 200 index .AXJO rose 0.3 percent, or 17.5 points, to 6021.5 at 0257 GMT. The benchmark declined 0.5 percent on Monday.
An index of Australia's top financial stocks .AXFJ climbed as much as 0.9 percent led by Commonwealth Bank of Australia CBA.AX which rose up to 1.4 percent.
Christopher Conway, head of research and trading at Australian Stock Report, said some bargain hunting was helping to shore up the market.
The revelations of misconduct by participants from a year-long inquiry into Australia's financial sector have shaved off about 7.4 percent of the value from the financial index since the inquiry was announced on Nov. 30.
Materials and energy stocks also added to gains on the index.
Mining stocks .AXMM climbed up to 0.7 percent led by Galaxy Resources GXY.AX , which jumped 18.1 percent to its best in more than two months after announcing the sale of certain lithium mining tenements in Argentina to South Korean steelmaker POSCO 005490.KS for $280 million. heavyweights Rio Tinto (LON:RIO) RIO.AX and BHP Billiton (LON:BLT) BHP.AX rose up to 0.3 percent and 0.9 percent, respectively as iron ore prices climbed. IRONORE/
Bauxite miner South32 Ltd S32.AX added up to 1.1 percent after it said it would buy a 50 percent stake in the Eagle Downs metallurgical coal project in Queensland state from state-owned China BaoWu Steel Group for $106 million. stocks .AXEJ snapped a five-session losing streak to add up to 0.5 percent as oil prices edged up. O/R
Woodside Petroleum WPL.AX and Beach Energy BPT.AX gained 1.7 percent and 2.7 percent, respectively, but Santos Ltd STO.AX fell 2.3 percent, losing for a third session in four since it rejected Harbour Energy's $10.8 billion buyout offer last week. telecom stock Telstra Corporation TLS.AX weighed most on the index, having lost up to 1.4 percent.
"This is just an extension of the problems Telstra is facing at the moment regarding some holes in their revenue around the mobile division and the National Broadband Network (NBN)," said Conway.
Telstra, which was hit by its second major network service outage in a month, warned earlier in May that its fiscal 2018 results would meet the lower end of its guidance and that challenges would persist into 2019 given the roll out of the NBN. the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.4 percent or 33.22 points to 8,611.98 at 0301 GMT.
Healthcare and consumer staple stocks weighed the most on the index. Top drags Fisher & Paykel Healthcare Corporation FPH.NZ and a2 Milk ATM.NZ lost up to 2.1 percent and 3.7 percent, respectively.