Australia shares close flat; slower CPI fuels rate cut hopes

By Adwitiya Srivastava

June 25 (Reuters) - Australian shares ended little changed after range-bound trading on Wednesday, as gains in financials balanced the losses in miners, while a softer-than-expected May inflation print solidified expectations of a rate cut by the central bank.

The S&P/ASX 200 index .AXJO closed largely flat at 8,559.20. The benchmark rose 1% on Tuesday.

Australian consumer price inflation (CPI) cooled more than anticipated in May, with the key core gauge falling to its lowest level in three and a half years.

"The monthly CPI reading coming in below market forecasts for May signals the RBA is on track to consider another rate cut in the very near future," said Grady Wulff, a market analyst at Bell Direct.

Markets now imply a 90% probability that the Reserve Bank of Australia (RBA) would cut rates by a quarter point when it meets on July 8, up from 81% before the data. 0#AUDIRPR

Financial stocks .AXFJ gained for a third consecutive session, rising over 1% to a record closing high. The "big four" banks rose between 0.7% and 1.8%.

Wulff said investors continue to favour big banks for their safe-haven appeal.

Discretionary stocks .AXDJ, a beneficiary of lower rates, climbed 0.2%.

On the other hand, heavyweight miners .AXMM declined 1.4%. Iron ore prices extended declines as increased shipments from Australia and Brazil, and slowing seasonal demand from top consumer China weighed on sentiment. IRONORE/

Technology stocks .AXIJ fell 0.4%. Sector major Xero XRO.AX agreed to buy New York payments provider Melio for $2.5 billion. Shares of the company were on a trading halt.

Energy stocks .AXEJ fell 0.8%, extending losses from Tuesday. Oil prices edged up but hovered near multi-week lows as investors assessed the stability of a ceasefire between Iran and Israel. O/R

New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.1% to close at 12,460.96.

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