(Updates to close) Financial stocks pushed Australian shares...

(Updates to close)

Financial stocks pushed Australian shares higher on Monday with the bank stocks benchmark hitting its highest level in over seven weeks on improved dividend prospects although a reversal in materials stocks capped wider gains.

Australia's benchmark S&P/ASX 200 index (xjo) rose 0.5 percent, or 28.625 points, to close at 5,739.3. The benchmark rose 1 percent on Friday.

Miner BHP Billiton (BHP) fell 0.2 percent while peer Rio Tinto (RIO) ended 0.1 percent lower despite a broad lift in commodity prices. [IRONORE/]

National Australia Bank (NAB) and peer Westpac Banking Corp (WBC) propped the index the most, closing up more than 0.7 percent each as investors were attracted to the lenders' dividend yields.

James McGlew, executive director of corporate stockbroking at Argonaut in Perth, said the relative yields of banking stocks compared with current low interest rates made them very attractive.

"It's a rotation out of the BHPs, the Rios and the likes back into the banks again and we see this type of sectoral switching going on quite regularly," McGlew said.

"It's interesting to see that strength in all the banks today was pretty much across the board - the best performer was NAB, of course."

Investors also shrugged off concerns about a class action lawsuit against Commonwealth Bank of Australia (CBA), which ended 0.6 percent higher. The lender said it would "vigorously defend" the shareholder lawsuit filed by law firm Maurice Blackburn accusing it of failure to disclose anti-money-laundering rule breaches.

On the other hand, South32 and Fortescue (FMG) were the biggest drags on the index, falling more than 1.8 percent each.

Hotel operator Mantra Group (MTR) zoomed as much as 18 percent before closing up 16.4 percent as it received a potential takeover bid from French peer Accor

In New Zealand, the benchmark S&P/NZX 50 index (nz50) ended above the 8,000 mark for the first time as the kingmaker leader of the New Zealand First party continued to hold coalition talks with the governing and opposition parties.

The Kiwi equity index rose 0.4 percent, or 32.94 points, to finish the session at 8,010.28. Gains in consumer staples and materials more than negated the impact of losses in energy and real estate.

Dairy major A2 Milk (ATM) led the gains, rising 2.5 percent.

Genesis Energy (GNE) and Z Energy (ZEL) fell as much as 2.3 percent and 0.8 percent, respectively, on higher oil prices.