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Australia shares edge higher on Santos' record quarterly production

* Energy index marks highest close in 2-1/2 weeks

* Two of Big Four banks close higher

* Tech stocks, miners limit gains on benchmark (Updates to close)

July 23 (Reuters) - Australian shares closed slightly higher on Thursday, propped up by the energy sector, after industry heavyweight Santos Ltd’s better-than-expected quarterly production report, even as investors were poised between the bulls and the bears.

The S&P/ASX 200 index edged 0.3% higher to 6,094.50 at the close of trade, following a 1.3% gain on Wednesday.

Santos, the country’s second-largest independent gas producer, finished 3.5% higher, its highest close since June 10, after it reported a record 18.6% rise in quarterly production.

This helped the energy sector rise 1.2% to close at its highest since July 6.

Meanwhile, Treasurer Josh Frydenberg said on Thursday the national budget was set to plunge into its biggest deficit since World War Two this year, as the coronavirus crisis knocks Australia into its first recession in three decades.

“The government budget update today was pretty much in line with what most economists were talking about. So although it’s a big number, it’s kind of been a non-factor,” said Henry Jennings, senior analyst at Marcus Today Financial.

“It’s a bit two steps forward, one step back at the moment as we head in towards reporting season, which of course will be the big test for some of the valuations.”

Financial stocks rose 0.18% led by QBE Insurance Group Ltd, up 4.07%, followed by Perpetual Ltd gaining 3.69%.

Among the Big Four banks, Westpac Banking Corp and National Australia Bank Ltd finished higher, while the other two closed in the red.

Technology stocks fell 0.47% led by Nearmap Ltd , down 3.61%, followed by TechnologyOne Ltd losing 2.31%.

ASX 300 metals and mining index fell 0.11% led by Bellevue Gold Ltd, down 3.64%, followed by Ramelius Resources Ltd losing 2.43%.

In New Zealand, the benchmark S&P/NZX 50 index fell 0.25% to 11,693.4.

Top losers on the are Oceania Healthcare Ltd , down 3.88%, followed by Tourism Holdings Ltd losing 3.33%. (Reporting by Nikhil Subba in Bengaluru; Editing by Shounak Dasgupta)