(Corrects paragraph 2 to say S&P/ASX 200 index rose, not fell)
* Mining index closed higher at nearly 1%
* Iron ore futures set for a second consecutive weekly gain
* NZ shares fall 0.35%
Aug 18 (Reuters) - Australian shares edged higher on Friday, led by gains in mining stocks, on renewed hopes of more policy support from China, while global markets continued to trade lower on concerns that the Federal Reserve will keep interest rates higher for longer.
The S&P/ASX 200 index rose 0.03% to 7,148.1 points. The benchmark fell 0.7% on Thursday, marking a one-month low.
Globally, investors are cautious about China's bleak economic outlook and the lack of urgent measures from authorities, while fears of U.S. rates staying higher weighed on sentiment.
Investors now await Fed Chair Jerome Powell's comments on economic outlook on Aug. 25 in Jackson Hole, Wyoming.
In Australia, miners were the top winners, ending up nearly 1%, helped by gains in iron ore futures, as investors breathed a sigh of relief that Chinese steel mills are yet to cut production amid concerns about long-term demand.
"Resources are bouncing a little on higher commodity prices and the forlorn hope that China will stimulate. The worse it gets there, the greater the hope that authorities will do something big," said Henry Jennings, senior analyst and portfolio manager at Marcustoday Financial Newsletter.
Sector majors BHP Group, Fortescue and Rio Tinto were up between 0.9% and 1.4%.
Energy stocks closed down 0.4% despite a hike in oil prices, which are set to snap a seven-week winning streak on Friday.
"A hawkish Fed can re-spark recession fears and press on commodity prices and this can further weaken consumer demand and strengthen the U.S. dollar," said Tina Teng, analyst at CMC markets.
The financials sub-index lost 0.5% as investors eye Powell's comments next week for cues on the Fed's rate hike trajectory. The "big four" banks were down between 0.4% and 0.6%. New Zealand's benchmark S&P/NZX 50 index slipped 0.35% to end the day at 11,611.19 points.
(Reporting by Aishwarya Nair in Bengaluru; Editing by Sonia Cheema)