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By Roushni Nair and Sneha Kumar

July 26 -Australian shares rose on Friday after miners and financials helped the benchmark index recoup some losses from the previous session, with focus squarely on next week's domestic inflation data.

The S&P/ASX 200 index .AXJO rose 0.8% to 7,921.3 points, offsetting two straight sessions of losses. The benchmark index, however, is set to log its worst week in six, having lost more than 0.6% so far.

June quarter consumer price data on Wednesday will dictate whether the Reserve Bank of Australia (RBA) will be forced to prop up interest rates when it meets on Aug. 6.

"An inflation rate higher than 4% will place the RBA in a very difficult position, suggesting RBA is still some distance from meeting its mandate and awkwardly becoming the only major central bank that needs to raise the cash rate further," Hebe Chen, an analyst at IG Markets, said.

With interest rates currently at a 12-year high of 4.35%, the country's banking sector has outperformed all other sub-indexes so far this year.

Banks .AXFJ led the charge to add 0.5%, while logging its third straight week of gains. Top lender Commonwealth Bank of Australia CBA.AX rose 0.1%.

Miners .AXMM followed suit to advance 1.5% after a rally in lithium-focused stocks helped recover some lost ground.

"The commodities sector has been under pressure lately ... stocks are at cheap levels at the moment and I think investors are starting to see a little bit of value in such shares," said Mark Gardner, head of equities advisory at MPC Markets.

Markets globally also took cues from data that showed U.S. inflation pressures subsided, validating expectations of an interest rate cut by the Federal Reserve as early as September this year. FEDWATCH

Energy .AXEJ and healthcare stocks .AXHJ rose 0.8% and 0.7%, respectively.

New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.4%. The benchmark index, however, is up for five straight weeks.

Reporting by Roushni Nair and Sneha Kumar in Bengaluru; Editing by Shounak Dasgupta

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