(Adds analysis, quotes, stocks on the move)
SYDNEY/WELLINGTON, May 15 (Reuters) - Australian shares rose to their highest in over a week on Friday thanks to gains in the major miners, but a mixed performance in the banking sector capped the overall market.
The S&P/ASX 200 index climbed 0.4 percent, or 21.8 points, to be at 5,718.3 by 0210 GMT. The benchmark index was up 1.5 percent so far this week, turning around from two weeks of declines.
Market sentiment improved after Wall Street ended at a record high on Thursday.
"Everyone is a bit more positive, it's good to see an up day given we've had such a volatile couple of weeks," said Lucinda Chan, division director at Macquarie Equities.
"Commodities are driving the market up and you're seeing some discretionary stocks doing particularly well."
Retailers such as Harvey Norman have been among the best performers this week after the federal budget, unveiled on Tuesday, contained a surprise tax break to help small businesses spend more on office supplies.
Mining giants BHP Billiton and Rio Tinto climbed 1.1 percent and 0.6 percent respectively.
Among the big four banks, National Australia Bank fell 3.3 percent as the stock traded ex-dividend, while Westpac Bank slipped 0.5 percent. The other two were firmer.
Also faring well, New Zealand's benchmark NZX 50 index rose 0.4 percent, or 20.2 points, to 5,758.6, supported by construction and retail shares.
Nuplex climbed 2.8 percent to a fresh four-year high of NZ$3.69 after the polymer and resins maker continued to buy back some of its shares. The company also upgraded its earnings guidance earlier in the week.
Xero jumped 3.0 percent, cheered after the cloud-based accounting software developer topped a Forbes magazine list of most innovative growth companies, while outdoorwear maker Kathmandu rose 2.1 percent.
For more stocks on the move, click on (Editing by Shri Navaratnam)