Australian shares gained modestly on Tuesday as the Reserve...

Australian shares gained modestly on Tuesday as the Reserve Bank expressed cautious optimism for the country's economic prospects, although it also showed some concerns over low wage growth.

Minutes of the Reserve Bank of Australia's last policy meeting showed that the central bank took its optimistic view despite a run of soft data that led to a contraction in the third quarter, implying it was done cutting interest rates for now.

Most sectors, led by financials, rose shadowing Wall Street gains as a certain amount of year-end optimism also kept sentiment afloat.

The S&P/ASX 200 index (xjo) was 0.6 percent, or 35.42 points, higher at 5,597.5 at 0210 GMT.

The Australian government on Monday had forecast a A$10 billion deterioration in its budget deficit over the next four years.

Major rating agencies Fitch and Moody's, however, placated investor fears by noting the forecast was consistent with a triple-A rating, while Standard and Poor said the budget update had no immediate impact on its AAA rating.

The benchmark closed 0.5 percent higher in the previous session led primarily by financials.

"Investors are identifying a little bit of value in that space (financial sector) still," said Ben Le Brun, a market analyst with Optionsxpress.

"Especially if the interest rate cycle turns here in Australia and we start to see interest rate hikes, that is going to be good for the net interest margins."

Australia's financial index .AXFJ, whose constituents have tracked gains by their U.S. peers ever since the election of Republican Donald Trump as U.S. President, has gained 14 percent since Nov. 9.

The 'Big Four' banks gained around 1 percent each. Consumer stocks and utilities were among the biggest gainers, with retailer Wesfarmers (WES) 1.1 percent higher.

AGL Energy (AGL) and APA Group (APA) added 2.4 percent and 2 percent each.

Basic materials and energy stocks, on the other hand, suffered from weakened commodity and placid oil prices. [IRONORE/] [MET/L] [O/R]

Mining giants BHP BIlliton (BHP) and Rio Tinto (RIO) were 0.8 percent and 0.4 percent lower respectively.

Oil major Woodside Petroleum (WPL) was 1 percent weaker. New Zealand's benchmark S&P/NZX 50 index (nz50) was up 0.4 percent in its third straight session of gains, at 6,811.52.

The gains were led by financials and healthcare sectors with Westpac Banking Corp (WBC) gaining over 1 percent , its highest in 7 months, while Australia and New Zealand Bank (ANZ) gained 0.8 percent in its fifth straight session of gains.

Ryman Healthcare Ltd (RYM) entered its third straight session of gains, rising as much as 3.05 percent, while Fisher & Paykel Healthcare Corporation Ltd (FPH) gained 0.24 percent.