Australian shares jumped to a three-week peak on Tuesday, after a rebound in iron ore prices prompted investors to buy battered resource stocks, while AGL Energy soared on plans to sell assets and cut costs. The S&P/ASX 200 index rose 0.9 percent to 5,773.4 at the close of trade. It was the fourth straight day of gains. New Zealand's benchmark NZX 50 index had a quiet day and finished the session flat at 5,795.8.
The benchmark is up nearly 3 percent since slipping to its weakest in four months last week. Some analysts, however, remain cautious on the outlook. "There are a lot of bargain hunters, but they are not buying with a lot of conviction," said Ben Le Brun, market analyst at OptionsXpress, pointing to low trading volumes.
The market was driven up by across-the-board gains with mining companies making large advances. Iron ore producer Fortescue Metals Group was the stellar performer, up 8 percent on a media report that Chinese firms had applied to buy a stake. Resource stocks had already been in demand after prices of iron ore, Australia's top export earner, jumped 6 percent in three sessions. Rio Tinto and BHP Billiton were up more than 1 percent each.
Overall, utilities was the top performing sector with a 2.45 percent gain, largely thanks to gas and electricity retailer AGL Energy which announced around A$1 billion of asset sales and A$200 million of cost cuts by the end of 2016-17. AGL shares leapt 7 percent to reach their highest since 2008. Banks extended gains with Westpac Banking Corp leading the pack with a 1.7 percent rise. Australia and New Zealand Banking Group and National Australia Bank gained around 1.2 percent each, while Commonwealth Bank of Australia was up 0.7 percent. SkyCity fell 1.1 percent to NZ$4.34, retreating from a near two-year high of NZ$4.39 ($3.21) hit the previous day, after the company unveiled updated plans for its convention centre in Auckland which would be costlier yet smaller than original plans.