Australian shares made modest gains on Wednesday, clawing back losses from the previous session as a China-led mining rally helped offset a decline in technology and healthcare stocks.

Local gains, however, were capped by a cautious global mood ahead of the European Central Bank's meeting on Thursday, at which policymakers are widely expected to cut interest rates, ramp up asset purchases or both.

The S&P/ASX 200 index rose 0.2% to 6,624.60 by 0243 GMT. The benchmark slid 0.5% on Tuesday.

To revive their flagging economies, central banks around the world, including the United States, China, Europe and Australia, have indicated further interest rate cuts and economic stimulus.

Michael McCarthy, chief market strategist at CMC Markets, said the improving risk sentiment is driving people towards growth stocks instead of safe-havens, thus benefiting resource stocks.

Mining stocks were the best performers, gaining 1.5% in their strongest session since Aug. 30, as iron ore prices rose on expectations China would implement more economic stimulus to boost steel demand.

The world's two largest miners BHP Group and Rio Tinto climbed about 1% and 2%, respectively.

Financials, which constitute a lion's share in the Australian benchmark, rose 0.7% to their highest level in over a month, with all the “Big Four" banks trading higher.

National Australia Bank on Wednesday revised its outlook for interest rate cuts by the country's central bank, predicting at least two more easings to 0.5% by February from previous forecast of one cut.

Oil and gas majors Beach Energy and Woodside Petroleum climbed 1.4% and 0.3%, respectively, helping the energy index advance 0.3% to its highest level since Aug. 5.

Oil prices were firmer in the early session after an industry report showed crude stockpiles in the U.S. fell last week by more than twice the amount that analysts had forecast.

Woodside Petroleum is seeking to cut its stakes in the Scarborough gas field at home and in Canada's Kitimat liquefied natural gas (LNG) project to cut its capital exposure, CEO Peter Coleman told Reuters on Tuesday.

New Zealand's benchmark S&P/NZX 50 index tumbled 1.6% to 10,958.95, weighed by telecom and utilities.

Electricity retailer Meridian Energy fell nearly 5% to its lowest level in slightly over a week, while telecom company Spark New Zealand declined almost 4%.