* Trade tensions cut gains notched after May 18 election
* Aussie index on track for best weekly gain since late April
* Financials set for best week since Feb, despite Friday slip
* NZ benchmark falls from record high hit on Thursday
By Rashmi Ashok
May 24 (Reuters) - Australian shares slipped on Friday, dragged down by financials and energy stocks as more investors price in the possibility of a protracted Sino-U.S. trade war.
Despite Friday’s losses, the S&P/ASX 200 index was on track for a weekly gain of about 1.3%, its best performance in four weeks. The weekly gain is rooted largely from optimism after results in Australia’s general election on May 18
At 0051 GMT, the index was down 46.20 points or 0.7% to 6,445.40.
Worries over Sino-U.S. trade tensions contributed to drops of more than 1% overnight for main U.S. indexes.
U.S. President Donald Trump said on Thursday that Washington’s complaints against Huawei Technologies might be resolved within the framework of a U.S.-China trade deal, while at the same time calling the Chinese telecommunications giant “very dangerous.”
Greg McKenna, founder of Sydney-based financial advisory firm McKenna Macro, said in a note “We have had a narrative shift as traders and investors have woken to the notion that the trade war is becoming intractable and hegemonic.”
The trade war is becoming like Brexit as the protagonists retreat to their corners and are ready for a fight, he added.
Australian financials weighed most heavily on the benchmark. Commonwealth Bank of Australia slipped 1.1% while National Australia Bank lost 1.2%.
Still, financial stocks had a weekly gain so far of about 5.5% - which would make for their best week since Feb. 4-8, thanks to a near 8% advance on Monday and Tuesday combined.
Energy stocks plunged nearly 3%, after oil prices gave up about 5% as trade tensions hit the demand outlook. The sub-index was set for a weekly loss of about 4.1%, its worst performance since late March.
Woodside Petroleum dropped 3.3% while Santos lost 4%.
Miners also edged down and was headed for a weekly loss of over 2%, despite record high iron ore prices.
Bucking Friday’s trend, the defensive healthcare stocks which tend to perform well during times of market volatility, were slightly higher.
Index heavyweight CSL added as much as 0.7%, while Cochlear rose 0.6%.
Also benefiting from increasing tensions were gold stocks which surged 1.5%. Newcrest Mining rose 1.3%.
New Zealand’s benchmark S&P/NZX 50 index fell 0.4% or 39.34 points to 10,224.07, but was on track for a weekly gain of about 0.3%.
Diary giant a2 Milk Company fell 1.6% while Synlait Milk shed 3.4%, among top losers on the kiwi index.
Reporting by Rashmi Ashok in Bengaluru; Editing by Richard Borsuk