SYDNEY: Australian shares rose 0.5 percent on Tuesday in light turnover, led by gains in resources and financials, although investors remained wary over Europe's debt position with Italian bond yields at a pre euro era highs.
Italy's woes are in focus as the country's Parliament prepares to vote on Tuesday, with a chance the Berlusconi government could fall, an event that may be welcomed by markets.
"We all heard about Italy this morning, that got the US market a bit excited but it certainly didn't get our market excited. I think the focus is still very much all eyes on Europe as to what will be the outcome there," said Lucinda Chan division director Macquarie Equities.
"A lot of hot air and not enough action, I think that's the problem," she added.
Chan also noted that the market was keenly awaiting Chinese CPI figures due on Wednesday, with investors sticking to the sidelines ahead of the release.
Australia's big four banks were amongst the best performers all rising more than 0.5 percent. ANZ was the best of the lot up 1.8 percent ahead of recording its dividend.
The materials sector also performed well with global miner Rio Tinto up more than 1.4 percent and iron ore miner Fortescue up 2.9 percent.
Newcrest Mining gained 1 percent on the back of strong gold prices overnight and after the company announced it was to issue $1 billion in corporate bonds.
Australia's parliament on Tuesday, as expected, passed landmark carbon tax laws to impose a A$23 per tonne tax on carbon emissions for 500 of the biggest polluters across mining, energy, heavy manufacturing and transportation from mid-2012, leading to a full emissions trading scheme.
Shares in Australia's largest shopping mall owner, Westfield Group , rose 1.7 percent after it confirmed its earnings forecast for the year to December.
Australian media group Fairfax Media Ltd fell 3.2 percent on Tuesday after the company said it plans to raise NZ$529.5 million ($421.7 million) through an initial public offer of its online classified and auctions unit Trade Me at a price of NZ$2.70 a share. ($1 = 1.256 New Zealand Dollars)
The benchmark S&P/ASX 200 index gained 20.4 points to 4,293.8, according to latest data. The benchmark index slipped 0.2 percent on Tuesday.
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