March 27 (Reuters) - Australian shares recovered on Tuesday, tracking a surge in U.S. stocks, as reports of behind-the-scenes talks between United States and China raised hopes that a destructive trade war could be avoided.
The S&P/ASX 200 index rose 0.6 percent or 33.7 points to 5,824.6 by 0100 GMT. The benchmark declined 0.5 percent on Monday.
Wall Street recorded its best day in 2-1/2 years and the Dow Jones Industrial Average posted its third-biggest point gain ever on Monday.
“There was a big bounce in the U.S. market so we are doing the relief rally bounce,” said Mathan Somasundaram, market portfolio strategist, Blue Ocean Equities.
But Somasundaram added that this bounce would be short-term because there were structural issues that could already be seen in the form of problems with global growth.
Following a strong cue from U.S. financials, banks led the rally locally. The Australian financials index rose as much as 0.8 percent, its biggest intraday percentage gain in more than two-weeks.
Commonwealth Bank of Australia, the country’s top lender by market capitalisation climbed 0.7 percent, while Westpac Banking Corp rose 0.4 percent.
Materials stocks also contributed to the gains despite lower metals prices.
Somasundaram said materials stocks were rising because investors were buying on sentiment without considering underlying themes.
Global miner BHP rose 0.5 percent, while its rival Rio Tinto Ltd strengthened 0.9 percent.
Fortescue Metals Group Ltd fell 2.7 percent to its lowest in more than 18 months after cutting its price guidance on iron ore sales for the year to end-June 2018.
The 1.4 percent fall in Newcrest Mining, Australia’s largest independent gold miner, was among the biggest drags on the benchmark.
Newcrest said it would recommence mining operations at its flagship Cadia mine on Tuesday but all mined ore would be stockpiled on the surface until processing restarted.
In New Zealand, the benchmark S&P/NZX 50 index rose 0.8 percent or 68.5 points to 8,500.91.
Consumer staples and health care stocks led the gainers, with a2 Milk Company Ltd surging about 3 percent, while Fisher & Paykel Healthcare Corporation Ltd rose 1.7 percent.
Reporting by Aditya Soni in Bengaluru Editing by Eric Meijer