Small gains for Aussie shares in first-half as decade-high interest rates weigh

* ASX 200 ends H1 with 2.3% rise

* Three of top four banks expect 25bps hike next week

* Energy stocks down 1.9% for H1

* NZ benchmark adds ~4% over H1

June 30 (Reuters) -

Australian shares eked out a smaller gain in the first half of 2023 from the previous six-month period, battered by high borrowing costs to contain sticky inflation, which affected consumer spending and economic growth outlook.

On Friday, the S&P/ASX 200 index finished 0.1% higher at 7,203.30, ending the first-half with a modest 2.3% rise after gaining 7.2% during July-December 2022. The index declined 11.8% in the first half of 2022.

Over the first-half, the Reserve Bank of Australia (RBA) took its cash rate to an 11-year high of 4.10%, a cumulative 400 basis point hike since May 2022 as it battled inflation, but consequently slowed down economic growth significantly.

While inflation has eased over the period, it remains well outside the RBA's target range. That, coupled with strong retail sales, implies the central bank will have to continue tightening its monetary policy.

Three of 'Big Four' banks - ANZ Group, National Australia Bank (NAB), and Westpac - continue to expect quarter-point rate hikes in both July and August.

"A second pause (first in April), to gather further information, seems unnecessary and only risks the need for the cycle to extend even further into 2023 when the prospects for damage to the economy increase substantially," analysts at Westpac said in a note.

On the other hand, Bank of America expects a pause on the "dovish tone of June RBA minutes and softer than-expected May CPI", but still sees a quarter-point rate rise in August.

Heavyweight miners gained about 0.2% on Friday, and ended the first-half 1.8% higher. Sector giants BHP Group and Rio Tinto lost 1.2% and 1.4%, respectively, in the first half.

Energy stocks lost 1.9% during the first six months, with Santos Ltd adding 5.6% and Woodside Energy losing 2.7%.

Meanwhile, banking stocks dropped 2.2%, while healthcare sector slipped marginally over the period.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index rose 0.9% to 11,916.40. It ended the first half 3.9% higher, compared with a 5.6% gain in the prior half.

(Reporting by Ayushman Ojha; editing by Eileen Soreng)