SYDNEY: Australian stocks rose 0.8 percent, with banks leading gains as investors remain hopeful a German court will make a decision that prevents the euro zone sovereign debt crisis from spreading.
The benchmark S&P/ASX 200 index climbed 32.6 points to 4,358.4 as of 0253 GMT.
Later on Wednesday, Germany's Constitutional Court is expected to approve the European Stability Mechanism - the euro zone's new bailout fund - but legal experts believe it will impose tough conditions limiting German flexibility on future rescues.
A favourable court decision would show European sovereign debt and banking issues "are being addressed in a more robust form and obviously would be positive for banks there and banks here," said Peter Warnes, head of equities at Morningstar, adding that it will signal "the market is freeing up a bit."
Shares in the banking sector all rose with the Commonwealth Bank of Australia posting the biggest gain, 1.5 percent to A$54.98.
A measure of Australian consumer confidence rose 1.6 percent in September to 98.2, recouping some of August's fall. Optimism grew on personal finances and the economic outlook, an encouraging result given the recent torrent of gloomy media coverage about a possible end to Australia's mining boom.
Mining shares rose, gaining support after Chinese Premier Wen Jiabao said the country could utilise a 100 billion yuan ($15.8 billion) fiscal stability fund to boost growth if needed.
BHP Billiton rose 0.8 percent and Rio Tinto gained 1.4 percent. China is Australia's biggest export market.
Investors are also waiting on news from the United States as economists see a 60 percent chance the Federal Reserve may announce another round of quantitative easing at the end of its two-day meeting starting on Thursday.
New Zealand's benchmark NZX 50 index .NZ50 rose 0.9 percent to 3,777.5 points.
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