SYDNEY: Australian shares rose to three-week closing highs on Tuesday, helped by gains in heavyweight financials and iron ore miners, while signs of steadying employment and improving business conditions added to investor confidence.

The S&P/ASX 200 index settled 0.5% higher at 6,138.7, its highest close since July 21, in low-volume trading. Leading the charge, financials rose more than 1%, with the 'big four' banks climbing in a range of 1% to 2.7%.

Among gainers, shares of some iron ore miners rose as futures on China's Dalian Commodity Exchange jumped on falling portside inventories and upbeat demand, with BHP Group and Rio Tinto gaining 0.9% each. Gold stocks fell over 4% as bullion prices retreated on a stronger dollar.

Newcrest Mining, the country's largest independent gold miner, lost 2.8%, while Northern Star Resources dropped 5%. Biotech firm Mesoblast dropped more than 30% after a US FDA committee questioned the efficacy of one of its leading drug candidates. New Zealand's benchmark S&P/NZX 50 index slipped 0.3% to 11,645.3, dragged by losses in healthcare and consumer stocks.