May 19 (Reuters) - Banks and technology stocks boosted Australian shares on Friday, with overnight gains on Wall Street and progress on debt-ceiling talks aiding investor sentiment.

The S&P/ASX 200 index rose 0.5% to 7,270.3 by 0035 GMT.

Investors were optimistic on news that a deal to raise $31.4 trillion U.S. debt ceiling could be reached within days, drawing attention away from uncertainty about the Federal Reserve's stance on interest rates.

Back in Sydney, a surprise drop in April employment data on Thursday implied that the red-hot labour market might be cooling, supporting the case for a pause in rate hikes.

Banks gained 1.2%, and were set for their best day in over one week. The so-called "Big Four" banks rose between 0.8% and 1.3%.

Technology stocks too jumped 2.3% and eyed their best weekly gains since early October. Heavyweight Xero's shares climbed 2.8%.

Gold stocks slid 1.9%, as bullion was pressured by optimism for a debt ceiling deal.

Lithium miner Pan Asia Metals's shares climbed 29.2% as it entered into a non-binding memorandum of understanding (MoU) with VinES Energy Solutions Joint Stock Company to evaluate lithium conversion facility in Vietnam.

Flagship carrier Qantas Airways said it expects the group's international capacity to grow to around 100% of pre-COVID-19 levels by March 2024, sending its shares up 0.5%.

New Zealand's benchmark S&P/NZX 50 index rose 0.3% to 12,014.59.

The country posted a trade surplus of NZ$427.00 million ($270.89 million) in April, according to data from Statistics New Zealand. ($1 = 1.5763 New Zealand dollars) (Reporting by Poonam Behura; editing by Uttaresh Venkateshwaran)