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Oil prices, receding trade war fears support Australia shares; NZ up

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[BENGALURU] Australian shares bounced off four straight sessions of declines on Tuesday, with the materials and financial sectors outperforming, taking their cue from a jump in oil prices and an upbeat US market.

The S&P/ASX 200 index rose 1.3 per cent, or 74.5 points, to 5,969.5 by 1252 GMT, gaining most in nearly four weeks. The benchmark closed down 0.6 percent on Monday.

Crude prices thrived on forecasts for robust oil demand growth and concerns that output from OPEC producers would grow at a much slower pace in coming years, lending support to the materials and energy sectors.

The metals and mining index gained as much as 2.4 per cent to mark its biggest intraday percentage gain in more than two weeks.

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BHP Billiton rose more than 3 per cent, making it the top advancer on the main index, while fellow heavyweight Rio Tinto scaled up 0.9 per cent.

Pemex, Mexico's state-run oil company, plans to reach out to BHP among others to form new joint ventures for two deepwater blocks it won in a January auction.

Financial stocks rose as much as 1.1 per cent, with the 'Big Four' banks adding between 0.1 per cent and 1.1 per cent, following a rally in US stocks. Investors moved to the view that Trump's tariffs threat was a negotiating tool after he tweeted that Canada and Mexico could avoid his proposed tariffs if they ceded ground in the North American Free Trade Agreement (Nafta) talks.

"There is a bit of hope given what we have heard from the US President that the tariffs may be linked to Nafta negotiations and may not actually proceed. Now that's not clear-cut obviously; if we get more clarity going the other way, the markets might reverse," said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.

"I think there is still substantial risk in the market but in the shorter term, I think the market is assuming a bit more positive approach to the tariffs so we've seen a bounce in the US markets and that is flowing through to Australia."

Australia's central bank is seen as all but certain to keep its cash rate at a record low of 1.5 per cent at its monthly policy meeting next week, a Reuters poll of economists found.

Among top gainers on the main index was telecom operator Telstra Corp, up as much as more than two per cent, its biggest intraday percentage gain in nearly five weeks.

Telstra confirmed a deal with News Corp to combine Foxtel and Fox Sports Australia, two months after Australia's competition watchdog dropped its opposition to the merger.

New Zealand's benchmark S&P/NZX 50 index also edged higher, up 0.4 per cent, or 35.83 points, to 8,315.66.

Utility, healthcare and materials stocks led the gains on the index, with construction materials maker Fletcher Building being the best performer, rising as much as 3.5 percent to its highest in almost two weeks.

Reeling from spiralling costs and deep losses in major projects, New Zealand's second-largest company by revenue, flagged in February that losses were NZ$660 million (S$632.27 million), even larger than anticipated last year, and that it was exiting the commercial construction business.

REUTERS