* Loan volumes for banks will increase - analyst
* Santos, Carnarvon higher as major oil and gas resource confirmed
* Copper weakness weighs down miners
By Devika Syamnath
June 6 (Reuters) - Australian shares rose on Thursday, led by the banks and outperforming more subdued regional markets as a recent central bank rate cut and other easing measures looked set to support business in the sector.
Australia's S&P/ASX 200 index .AXJO was 0.6% higher at 6,395.1 by 0150 GMT, having gained 0.4% higher on Wednesday.
Wall Street strengthened overnight but broader Asian shares were cautious on fears a looming U.S. trade war with Mexico would further depress global growth. .N MKTS/GLOB
Australian financial stocks .AXFJ , which make up the bulk of the main index in market capitalisation terms, extended gains for a third straight session to add as much as 0.8%.
The "big four" banks rose between 0.5% and 1% two days after the Reserve Bank of Australia lowered rates to a record low to prop up a cooling economy and property market downturn.
"APRA (Australian Prudential (LON:PRU) Regulation Authority) has loosened the borrowing restrictions recently and now we have a rate cut as well. The Federal election is also out of the way. For all those people who were hesitant to borrow money to invest in or buy a property, they have three big reasons to go ahead," said Christopher Conway, senior investment adviser at Marcus Today.
"Debt is now cheaper. The volume of money being borrowed from the banks will increase."
Conway added that Australia and New Zealand Banking ANZ.AX and Westpac Banking WBC.AX have protected their net interest margins by not passing on the rate cut fully and this "could encourage some buying back into the sector."
In other banking news, Bank of Queensland BOQ.AX named George Frazis, outgoing head of consumer banking at Westpac, as its chief executive and managing director. oil prices capped gains on the energy index .AXEJ but Santos Ltd STO.AX powered through to gain as much as 2.6% after the Dorado-2 appraisal well, which it partly owns, confirmed a major oil and gas resource. energy peer Carnarvon Petroleum CVN.AX , which owns the rest of the stake, surged as much as 15.7% to a more than nine-month high.
Mining stocks .AXMM , the second biggest sector on the benchmark, bucked the overall trend to fall as much as 0.6% after copper weakened to a five-month low on Wednesday. MET/L
Heavyweight Rio Tinto (LON:RIO) RIO.AX declined as much as 1.8% while the world's biggest miner BHP Group BHP.AX lost 0.8%.
New Zealand's benchmark S&P/NZX 50 index .NZ50 was 0.3% higher at 9,980.68, bolstered by healthcare gains.
Fisher & Paykel Healthcare Corp FPH.NZ added as much as 1.8%.