Australia shares edge up, banks lend support

* Shares (Berlin: DI6.BE - news) mostly unchanged, investors cherry pick

* Banks and some resource shares support index

* 95 shares up, 94 down, 11 unchanged (Adds analysis, quotes, stocks on the move)

By Pauline Askin and Naomi Tajitsu

SYDNEY/WELLINGTON, June 24 (Reuters) - Australian shares rose 0.2 percent, trading narrowly on Wednesday as some investors picked up banking shares after a heavy sell-off in previous sessions.

Progress towards a Greek deal combined with the Federal Reserve governor's comments about a possible rate hike in September have investors in a holding pattern.

The S&P/ASX 200 index gained 18.5 points to 5,702.8 by 0254 GMT. The benchmark rose 1.3 percent to its highest since June 2 on Tuesday.

"People are still digesting and maybe even speculating as to what the outcome of Greece will be," said Damien Boey, equity strategist at Credit Suisse (NYSE: CS - news) .

EU finance ministers meet on Wednesday to discuss whether or not to put Greece's debt deal to euro zone state heads. If it goes ahead, the Greek parliament could vote as early as this weekend.

"Part of the issue particularly with banks is they've been sold off quite heavily recently, it wouldn't surprise me if some people were looking for some value," he said.

Australian shares have fallen each month since March and are expected to end June in the red dragged lower by banking and resources shares.

Solid (KOSDAQ: 050890.KQ - news) gains in banks and resources buoyed the index, with ANZ Bank and Westpac rising 1.2 and 0.6 percent, respectively. Consumer staples such as Woolworths fell 0.9 percent.

Mining giant BHP rose 0.3 percent while Rio Tinto (LSE: RIO.L - news) fell 0.6 percent.

Trading on Wall Street was quiet though Nasdaq still hit a record peak.

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New Zealand's benchmark NZ50 share index edged up 16.9 points or 0.3 percent to 5,788.97 in early trade, lifted by gains in utilities and consumer-related companies.

SkyTV rose 1.3 percent, bouncing back from a two-month low of NZ$6.05 hit on Tuesday, after the pay TV operator said it had dropped legal proceedings against online service providers.

Contact Energy (NZSE: CEN.NZ - news) rose 0.6 percent, bouncing off a one-month low of NZ$5.12 hit the previous day amid ongoing speculation that major shareholder Origin Energy may sell its stake in the energy retailer.

Meridian Energy rose 0.7 percent.

Specialised milk processor a2 Milk Company rose 5.6 percent to a one-year high of NZ$0.770, extending gains after the company announced earlier in the week that it had been approached with a takeover offer.

Further gains were limited by a 1.6 percent slide in Pacific Edge, while retirement home operator Ryman Healthcare slipped 0.4 percent. (Editing by Jacqueline Wong)