The S&P/ASX 200 index finished up 0.5%, or 33.4 points, at 6,724.60. The benchmark was marginally down on Monday.

Investors are looking to policy decisions from global central banks, with the European Central Bank seen cutting key rates by 10 basis points on Thursday and the U.S. Federal Reserve expected to follow with a 25 basis trim a few days later.

The market is waiting to hear from the ECB as they will be a leading indicator about what the Fed will do, said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.

Humming along to the dovish tune, a top Reserve Bank of Australia official said on Tuesday that the central bank was ready to cut rates again "if needed". However, he added that a move to quantitative easing is highly unlikely.

Financials rose despite the Australian financial watchdog announcing on Tuesday its intention to prescribe stricter terms on executive pay policies of large banks.

Westpac Banking Corp added 0.3% and National Australia Bank gained 1.1%.

As oil prices edged higher on Tuesday amid lingering concerns about possible supply disruptions in the Middle East, the energy index gained 1.4%.

Woodside Petroleum advanced 0.9% and Oil Search rose 2.5%.

Global miner BHP Group closed up 0.6% as at least three Australian institutional investors are pushing for the firm to consider external candidates to replace Andrew Mackenzie as new CEO, Reuters sources said.

Peers Rio Tinto and Fortescue Metals Group were down 0.4% and 1.4%, respectively, on falling iron ore prices.

New Zealand's benchmark S&P/NZX 50 index hit a record closing high, rising 0.39%, or 42.56 points, to 10,867.25.

a2 Milk Company added 1.9% and Auckland International Airport was up 0.3%.