* Benchmark recovers on China-U.S. trade hopes
* Financials and miners recover to close near flat (Updates to close)
Nov 15 (Reuters) - Australian shares erased early losses to close almost flat on Thursday as investors took heart from further signs that both Beijing and Washington may be moving to de-escalate their months-long trade dispute.
U.S. government sources told Reuters on Wednesday that China - Australia’s biggest trading partner - had sent a response to U.S. demands for trade reform but gave no further details, raising hopes the two sides could resume negotiations to end their trade war.
The S&P/ASX 200 index tacked on 0.06 percent or 3.2 points to close at 5,736.0. But that hardly took back any of the steep 1.74 percent slide in the previous session when a plunge in oil prices and worries of weakening global growth triggered a broad risk-off move.
The slight improvement in sentiment allowed financial shares to pare nearly all losses to close a touch lower, with Commonwealth Bank of Australia losing 0.5 percent and Westpac Banking Corp down 0.4 percent.
The banks had sold off in morning trade on weakness in their U.S. peers which were hit by worries over more stringent regulations after the Democratic Party takes control of the U.S. House of Representatives.
Healthcare stocks also erased losses to edge 0.2 percent higher, with Cochlear Ltd putting on 0.7 percent.
Gold stocks jumped 1.7 percent after overnight gains in the yellow metal. Newcrest Mining Ltd firmed 1.9 percent and St Barbara Ltd gained about 2 percent.
On the downside, retirement community operator Aveo Group Ltd tumbled 4.4 percent to a 5-year closing low and was among biggest drags on the benchmark, after its management withheld fiscal year 2019 earnings guidance citing a softening residential market and uncertainty on future sales.
New Zealand’s benchmark S&P/NZX 50 index closed nearly flat, off just 0.021 percent or 1.85 points to finish at 8,825.89.
Losses among financial stocks were offset by gains in the industrial and healthcare sector.
Dairy firm a2 Milk Ltd rose 1.3 percent at close. (Reporting by Rashmi Ashok in Bengaluru; Editing by Shri Navaratnam)