Australian shares jumped 1.1 percent to close at a near seven-week high on Wednesday, as the banks jumped on hopes of a rate cut and signs that borrowing costs may be coming down in Europe. Australia's consumer prices were unexpectedly soft in the December quarter, and while underlying inflation was slightly above forecasts at 2.6 percent for the year, it was still comfortably within the Reserve Bank of Australia's long-term target band of 2 to 3 percent.
Commonwealth Bank and Westpac Banking Corp, most heavily exposed to home mortgages, led the way, with Westpac ending up 3.5 percent and CBA closing up 2.4 percent after touching a six-month high. The benchmark S&P/ASX 200 index gained 47 points to finish at 4,271.3, according to the latest data, its highest close since December 8. New Zealand's benchmark NZX 50 index rose 0.4 percent to close at 3,280.1.