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By Atharva Singh

Oct 31 (Reuters) - Australian shares erased early gains to finish slightly lower on Friday, led by losses in discretionary stocks as policy-easing bets eased, although advances in gold miners and some of the major banks limited the decline.

The S&P/ASX 200 index .AXJO slipped 3.6 points to finish at 8,881.90 points, after rising as much as 0.7% earlier. The benchmark, which hit a record high of 9,115.20 earlier in the month, logged a meagre 0.4% monthly gain.

Investors continued to shift into financials and gold stocks, favouring defensive assets amid lingering uncertainty over the Reserve Bank of Australia’s policy outlook. With a rate hold widely expected next week, risk appetite was muted. 0#AUDIRPR

"Given the hot CPI print and shallow RBA path, banks do appear to be a very lucrative place to be for the next cycle, especially as they are mostly insulated from trade-related volatility," said Justin Lin, investment analyst at GlobalXETFs.

The financials index .AXFJ finished a few points higher, buoyed by CBA CBA.AX and Westpac WBC.AX, which added 0.7% and 1%, respectively. ANZ Group ANZ.AX ended 0.6% lower after flagging an A$1.11 billion ($721 million) impact on its second-half cash and statutory profits.

Gold stocks .AXGD jumped 3.3%, extending their run on expectations of record bullion prices and helping limit losses on the benchmark. Evolution Mining EVN.AX and Northern Star Resources NST.AX climbed as much as 3.5% each.

The sub-index is still closing the month nearly flat, despite sharp swings driven by bullion price volatility.

Meanwhile, discretionary consumer stocks .AXDJ fell 1.7% to its lowest in three months, dragging on the benchmark.

Australia's top non-food retail conglomerate, Wesfarmers WES.AX, shed 2.5% on concerns over its valuation and the potential impact of interest rate expectations on demand, per Jefferies analysts. Jefferies slashed price target the stock by 5%.

Electronics retailer JB Hi-Fi JBH.AX fell 3.4%, losing a cumulative 9% over the past three sessions on tepid sales growth.

New Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.6% to end at 13,548.32 points.

(Reporting by Atharva Singh and Roshan Thomas in Bengaluru; Editing by Eileen Soreng)

((Atharva.Singh@thomsonreuters.com;))

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