Australian shares tracked global equities to end higher on Monday, driven by strong gains in heavyweight financial stocks, after data last week showed U.S. inflation steadied, boosting hopes of interest rate cuts by the Federal Reserve this year.

The S&P/ASX 200 benchmark index closed 0.8% higher at 7,761 points. The benchmark fell 0.3% last week.

The U.S. personal consumption expenditures (PCE) price index increased 0.3% last month, data showed on Friday, while consumer spending, which accounts for more than two-thirds of U.S. economic activity, weakened.

The data bolstered hopes that the Fed is more likely to deliver a long-awaited rate cut in September.

Meanwhile, Australia's independent wage-setting body raised national minimum wage by 3.75%, largely in line with inflation, as families tackle soaring living costs.

"The increase in the minimum wage in line with our expectations, and below the increase last year, suggests that the inflation impact will not be high," Kerry Craig, global market strategist at JP Morgan said.

"This should alleviate market concerns on further rise in wage indices, or deviate the Reserve Bank of Australia from its current messaging," Craig added.

On the bourse, rate-sensitive financials added 1.5% to an over one-week high and all the "Big Four" banks rose between 1.2% and 2.5%.

Real estate stocks advanced 1.4% after four straight sessions of losses.

Miners rose 0.3%. BHP Group climbed 0.7%, while Fortescue snapped a three-day losing streak, closing 0.2% higher.

Energy stocks added 0.7% to close at a one-week high.

The outliers, tech stocks and gold stocks retreated 0.7% and 1.4%, respectively.

JP Morgan's Craig said that the focus will be on the labour market data from the U.S. and the European Central Bank policy meeting, due later this week, as it will likely set market expectations around rate cuts.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index ended 2.7% at a one-month high of 11,867.29 points.

 

(Reporting by Sneha Kumar; Editing by Eileen Soreng)