* Investors return to bank stocks as inquiry worries fade
* Commodity stocks higher on firm metal, oil prices
* NZ closes at record ahead of RBNZ policy meeting (Updates to close)
By Devika Syamnath
March 21 (Reuters) - Australian shares ended higher on Wednesday, supported by financials as a recent spate of selling of bank stocks fizzled out, but gains were capped by caution ahead of a U.S. Federal Reserve policy decision later in the day.
The S&P/ASX 200 index rose 0.2 percent, or 13.9 points, to 5,950.3.
With an interest rate hike seen as all but certain at the end of the Fed’s two-day meeting on Wednesday (1800 GMT), investors’ focus has turned to whether it now expects to raise rates faster than expected just a few months ago, and if that would trigger a strong sell-off in equities.
Financial stocks ended 0.6 percent higher as investors seemed to move past an ongoing Royal Commission inquiry into the sector.
“The cause of the (Royal Commission) pressure has been very well flagged ... it looks like those who wanted to sell on the revelations we saw have already done so,” said Michael McCarthy, Chief Market Strategist at brokerage CMC Markets.
The centre-right government reluctantly agreed to call the year-long inquiry, which commenced last week, in response to a series of banking scandals including interest-rate rigging and breaches of anti-money laundering laws by Commonwealth Bank of Australia.
“Many issues brought to light were historic in nature ... the idea that there is a systemic issue at any of the ‘Big Four’ banks is yet to be established in any meaningful way and so there’s possibly been some buying on the back of that,” McCarthy added.
Australia’s ‘Big Four’ banks closed up in a range between 0.6 and 1 percent.
Materials stocks were supported by firmer metal prices while a rise in oil prices helped energy firms.
Global miner BHP Billiton rose 0.9 percent and was the second biggest boost to the main index. Woodside Petroleum added 0.4 percent, while Origin Energy closed at its highest in three weeks, up 1.3 percent.
Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index closed up 1.4 percent, or 121.14 points, at a record 8,608.29, with consumer staples leading gains.
Synlait Milk also closed at a record, up 14.1 percent, and was the biggest advancer on the main index after it posted its best first-half net profit.
A poll found the Reserve Bank of New Zealand (RBNZ) is widely expected to keep its cash rate at a record low 1.75 percent at its policy review on Thursday. (Reporting by Devika Syamnath in Bengaluru; Editing by Kim Coghill)