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Australian stocks rise as miners and banks benefit from improved risk sentiment

Australian shares ended a two session slide on Wednesday. Banks and miners boosted risk appetite as signs of progress towards a U.S. Iran deal increased.

The S&P/ASX 200 Index closed 1.3% higher, at 8,793.60. This is the highest close since early April. The benchmark index ended Tuesday 0.2% lower.

U.S. president Donald Trump announced "great progress" towards a final agreement with Tehran, and signaled a brief pause on operations to escort ships through the Strait of Hormuz. Iran has been blocking this strait since late February.

The financial stocks rose by 2.4% a day following the Reserve Bank of Australia's third rate hike this year, to 4.35%. The "Big Four" banks gained between 2,8% and 3,5%.

Prashant Newnaha is TD Securities' senior rates strategist. He said that the RBA didn't signal any further tightening but the markets expect an increase to be made, most likely at the August meeting. This will bring inflation back to the target.

The swaps indicate that there is a greater than 50% chance for a rate hike of 25 basis points at the meeting. The price of metals and iron ore rose on Wednesday as Chinese steel mills began production again after May Day holidays, with expectations that seasonal demand would pick up. BHP Group, Fortescue and Rio Tinto all gained between 2.3% to 3.2%.

Energy stocks fell 2.1%, capping gains as oil prices dropped for the second day in a row on hopes of an Iran deal.

DigiCo Infrastructure, the operator of a data centre in Chicago, saw its stock rise 25% among individual stocks after it announced a sale for $750 million.

The benchmark S&P/NZX 50 index closed 0.8% higher in?New Zealand at?13.145.19.

Anna Breman, Governor of the Reserve Bank of New Zealand, said that despite an escalating global risk outlook, New Zealand's financial system is resilient. (Reporting by Sruthi Narasimha Chari in Bengaluru; Editing by Harikrishnan Nair)

(source: Reuters)