Australian shares closed higher on Tuesday, marking their best session since June 16, after the country's central bank advocated for further fiscal stimulus, boosting demand for riskier assets.

The S&P/ASX 200 index closed 2.6pc up at 6,156.30, highest since June 10. The benchmark had settled 0.6pc lower on Monday.

Reserve Bank of Australia (RBA) Governor Philip Lowe on Tuesday urged the government to borrow more and boost public spending to support the country's economic recovery.

Lowe said the government could "smooth things out" through direct cash transfers to households and businesses as well as by boosting public spending on infrastructure and wage subsidy schemes.

"The RBA talked up the labour market and kept the status quo in many ways. This is the biggest driver today coming up from a flat US market close," said Brad Smoling, managing director at Smoling Stockbroking.

Promising early data from trials of three potential COVID-19 vaccines, which bolstered hopes that vaccines against the disease might be ready by the end of year, also supported market sentiment.

The Technology sector, which rose 5.7pc and closed at a record high, was the top gainer on the Australian benchmark index.

WiseTech Global closed 4.3pc higher, while Afterpay added nearly 8pc.

Healthcare stocks rose 3.7pc, cheering the potential vaccine results, with CSL Ltd gaining 3.9pc, and Cochlear firming 5.7pc.

The heavyweight financial index rose slmodt 3pc, marking its best day since June 10, with the Big Four banks closing above 2pc.

Australia's travel stocks also rebounded, with travel services provider Corporate Travel Management, one of the biggest percentage gainers on the benchmark, closing over 9pc higher.

New Zealand's benchmark S&P/NZX 50 index closed 1.6pc higher at 11,736.73.

Top gainers were Kathmandu Holdings, finishing 4.5pc up, followed by Skycity Entertainment that rose 4pc.