May 29 (Reuters) - Australian shares advanced on Friday, led by miners and gold stocks, as investors kept a watch on the Middle East conflict, following reports that the U.S. and Iran had reached an agreement to extend the ceasefire.

The S&P/ASX 200 index .AXJO rose 0.8% to 8,660.60, as of 0030 GMT. The benchmark closed 1.4% lower on Thursday. It is set for a 0.2% weekly gain.

The U.S. and Iran have agreed to a memorandum of understanding extending the truce for another 60 days to allow for negotiations, but U.S. President Donald Trump has yet to approve it, sources told Reuters.

In Sydney, heavyweight miners .AXMM gained 2.5%, tracking firmer copper prices. The sub-index has gained 9.6% so far this month and is on track for its biggest monthly climb in four months. Rio Tinto RIO.AX and BHP BHP.AX added 1.2% and 1.7%, respectively. MET/L

Gold stocks .AXGD advanced by as much as 5.5%, in step with stronger bullion prices. Both Evolution Mining EVN.AX and Northern Star Resources NST.AX gained 4.6%. GOL/

Financials .AXFJ inched up 0.3%, set for its best session since May 21. All the "big four" banks rose between 0.3% and 0.7%.

Real estate .AXRE and local technology stocks .AXIJ added 0.3% and 1.5%, respectively.

Bucking the trend, energy sub-index .AXEJ slid 0.9%. It lost over 6% so far this month, on track for its worst month since September.

Sector majors Santos STO.AX and Woodside Energy WDS.AX declined 0.6% and 1.5%, respectively.

In New Zealand, the benchmark S&P/NZX 50 index .NZ50 rose 0.4% to 13,254.75, following a bare-bones budget unveiled on Thursday that focused on preserving fiscal firepower.

The benchmark has gained 2.5% so far in May, on track for its best month since September 2025.

Inflation pressures are building in the island nation even if the U.S.-Iran conflict ends soon, a senior central banker said.