(Reuters) - Australian shares recorded their best session in nearly seven months on Monday as a downgrade in the country's growth outlook fuelled expectations of a further domestic rate cut.
The S&P/ASX 200 index <.AXJO> climbed 1.6%, or 110 points, to 6,849.7, as a preliminary trade deal between Washington and Beijing also boosted stocks. The rise was the benchmark's biggest daily gain since May.
Resource stocks, which churn out most of the nation's exports, gained sharply after the trade deal turned down the heat on a 17-month long tariff war that had triggered a growth downturn in China, Australia's biggest trading partner.
The "Phase one" agreement reduces some U.S. tariffs in exchange for what U.S. officials said would be a big jump in Chinese purchases of American farm products and other goods.
The world's biggest miner BHP Group <BHP.AX> advanced 1.6%, finishing at its strongest since Aug. 1, while the nation's biggest oil and gas producer Woodside Petroleum <WPL.AX> climbed 1%.
Australia on Monday cut its outlook for growth in the economy and wages as part of a A$33 billion downgrade to expected revenues over the next four years.
James Tao, a market analyst at CommSec, said the downgrade added fuel to hopes of a rate cut in the coming months.
Heavyweight financial stocks <.AXFJ> dominated gains, with the "Big Four" banks gaining between 1.4% and 1.8%.
Australian technology stocks <.AXIJ> jumped 1.8%, following Wall Street peers higher on the upbeat trade news. PhotoMap content provider Nearmap Ltd <NEA.AX> topped gains on the sub-index, adding 8.8%.
Elsewhere, shares of Northern Star Resources Ltd <NST.AX> were halted ahead of a "potential significant transaction," the company said. The Australian Financial https://www.afr.com/street-talk/northern-star-resources-eyes-50pc-super-pit-stake-20191216-p53k9lReview said the gold miner was finalising a deal to acquire U.S.-based Newmont Goldcorp's <NEM.N> 50% stake in Western Australia's Super Pit mine.
Saracen Mineral Holdings <SAR.AX>, which holds the remaining half of the mine, closed up 7.5% against a 1.8% higher gold index <.AXGD>.
New Zealand's benchmark S&P/NZX 50 index <.NZ50> fell slightly, by 14.76 points, to 11,226.83. Film industry software company Vista Group International <VGL.NZ> lost the most, ending 2.7% lower.
(Reporting by Devika Syamnath in Bengaluru, with additional reporting by Rashmi Ashok; Editing by Jane Wardell)
