Jan 28 (Reuters) - Australian shares snapped a four-session losing streak on Friday, after the market went into correction territory a day earlier when the U.S. Federal Reserve signalled a more hawkish stance on interest rates and flagged inflationary risks.

Investors now turn their focus to a policy meeting by the Reserve Bank of Australia due on Tuesday for a hawkish tilt as domestic inflation has accelerated. U.S. Fed's Jerome Powell had signalled on Wednesday an interest rate hike as soon as March with traders now betting on at least five hikes this year.

The S&P/ASX 200 index closed 2.2% higher at 6,988.1, but posted a third weekly loss of nearly 3%. The benchmark, however, did slide out of correction territory with the index down more than 8% from its August 2021 high.

The rebound is the absence of no further bad news with tensions between Russia and NATO over Ukraine and rising interest rates, said Dale Raynes, an associate director at CPS Capital.

Australian financials delivered their first session of gains in seven, adding 2.1%. All top four banks rose between 1.5% and 2.3%, while biotech firm CSL, one of Australia's largest companies by market value, closed 3.2% higher.

Miners rose 1.4%, with Rio Tinto and BHP Group climbing 4.1% and 2.7%, respectively.

Investors will be cautiously awaiting BHP's unification on Monday that may unleash a wave of volatility as index-tracking funds buy more of the world's biggest miner to meet their mandates.

Trading volumes this week on BHP were at their highest since March 2020 as the miner is set to account for more than a tenth of the ASX 200 once the unification is complete, with Morgan Stanley saying it could see index trackers seeking an extra A$4 billion worth of shares.

New Zealand's benchmark NZX 50 index ended 1.7% lower at 11,852.2, suffering its worst week since March 2020 after losing 4%.

(Reporting by Roushni Nair in Bengluru, additional reporting by Nikhil Kurian Nainan; Editing by Sherry Jacob-Phillips)