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* Banks cap gains, material stocks support
* Financial index touches lowest in 1.5 years
* NZ index at record, helped by health stocks
By Devika Syamnath
June 14 (Reuters) - Australian shares inched lower on Thursday with declining bank stocks offsetting upbeat material ones, as focus shifted from the U.S. Federal Reserve's rate rise to other policy decisions due in the next day.
The S&P/ASX 200 index .AXJO declined 2.4 points, or less than 0.1 percent, to 6,021.1 at 0231 GMT. The benchmark lost 0.5 percent on Wednesday.
The Fed hiked the benchmark overnight lending rate a quarter of a percentage point while solid expansion in the world's largest economy encouraged it to project a slightly faster pace of tightening than was initially anticipated. await the European Central Bank's policy meeting later on Thursday for mention of its intention to end a massive bond purchase programme by the end of this year.
Also, a Bank of Japan decision is due on Friday. Its two-day monetary policy meeting started on Thursday. those key events ahead of us, its no surprise we are essentially marking time here in the Australian market," said Michael McCarthy, chief market strategist at CMC Markets.
Telecom and material stocks were the best performers on the index.
Australia's largest telecom company Telstra Corp TLS.AX was the top boost, up 3.6 percent.
The index of material stocks .AXMM added over half a percent, supported by gold miner Newcrest Mining NCM.AX which snapped four sessions of losses, adding up to 1.8 percent.
Global miners BHP Billiton (LON:BLT) BHP.AX and Rio Tinto (LON:RIO) RIO.AX rose 0.6 percent and 0.7 percent, respectively.
Shares of Atlas Iron AGO.AX , lately a hot target for takeovers, dove over 19 percent after the government notified it that its North West Infrastructure JV does not have priority rights to develop certain ship berths in Port Hedland. berths are reserved for junior miners and to some extent it appears Atlas has been a victim of its own success. It's now at a level where the government no longer sees it as a junior miner, so it does not get priority access," said McCarthy.
Bank stocks capped gains on the index .AXFJ , losing up to 0.8 percent to reach its lowest level since November 2016.
Australia's "Big Four" banks declined between 0.7 percent and 1.2 percent.
Healthcare stocks also tracked lower with biotherapeutics company CSL Ltd CSL.AX down as much as 0.7 percent.
New Zealand's benchmark S&P/NZX 50 index .NZ50 touched a record and was 4.62 points higher to 8,981.93 at 0226 GMT.
Healthcare stocks held up the main board.
Fisher & Paykel Healthcare Corporation FPH.NZ was up 1.9 percent, rising for an 11th straight session to a record high.