(Adds analysis, quotes, stocks on the move)
SYDNEY, Dec 27 (Reuters) - Australian shares rose 0.5 percent on Friday, touching a one-month high with overnight gains on Wall Street providing the only significant trading clue and lifting financial stocks in a quiet post-Christmas session.
That's just 100 points below the 5-1/2 year high of 5,457.3 hit on Oct. 28, leaving some in the market contemplating the index rising beyond that level before the year is out.
"The way things have been going in the past six sessions in the U.S. with all the gains that we've seen, that would add to the reasons why it could happen," said Kara Ordway, market maker and trader at City Index.
Still, with few market drivers to stoke trading in the coming days, the index may fall short of surpassing the Oct. 28 high, Ordway said. On Friday, the session was so subdued that just 64 million shares had changed hands by 0025 GMT - less than a tenth of the daily moving average volume of 681.1 million shares in 2013.
Banks, heavyweights in the market benchmark index, led the way on Friday. The country's top lender, Commonwealth Bank of Australia, added 0.7 percent while Westpac Banking Corp rose 0.5 percent.
Retailers also traded higher, buoyed by the Australian National Retailers' Association estimating Dec. 26 sales alone may have exceeded A$1.9 billion ($1.7 billion), according to Chris Weston, IG (LSE: IGG.L - news) 's chief market strategist.
Department stores Myer Holdings Ltd and rival David Jones Ltd rallied 2 percent and 0.9 percent respectively.
But Elemental Minerals Ltd dropped 5.7 percent after the potash miner that is the subject of a takeover offer from Hong Kong-listed Dingyi Group said the parties have agreed to conditional timetable extensions to facilitate the bid process.
New Zealand's benchmark NZX 50 index slipped 0.2 percent or 8.5 points to 4,759.5. ($1 = 1.1258 Australian dollars)
(Reporting by Thuy Ong; Editing by Kenneth Maxwell)