(Reuters) - Australian shares rallied on Wednesday, as U.S. President Donald Trump's positive stance on trade relations with China raised optimism of easing discord between the two nations.
The S&P/ASX 200 index <.AXJO> traded around half a percent up through most of the day before climbing 1.4 percent to end the session at 5,653.5, moving in line with global markets.
In an interview with Reuters, Trump said discussions were underway with Beijing by phone and that tariffs would not be raised on Chinese imports until he was sure about a deal.
The Chief Financial Officer of Chinese telecoms giant Huawei Technologies Co Ltd [HWT.UL], Meng Wanzhou, was granted bail by a Canadian court on Tuesday, 10 days after her arrest as per Washington's directive, which had created diplomatic unease.
Trump said he would even intervene in the Justice Department's case against the Huawei executive if it would serve national security interests or help close a trade deal.
MSCI's index of Asian equities outside Japan <.MIAPJ0000PUS> also recovered on the news after falling around 2 percent on Tuesday.
Australia counts China as its top trading partner, and a slowdown in the Chinese economy from a trade war will directly affect Australian commodities exports.
Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities said investors were optimistic about China and the United States reaching a trade deal.
"...it looks like a fair amount of shorts are being covered and the market is getting a boost out of that," he added.
The Australian energy index <.AXEJ> was the best performer for the day, closing the session 2 percent higher, as energy stocks got a boost from a rise in oil prices.
Origin Energy Ltd <ORG.AX> climbed 3.6 percent and hit its highest since Nov. 13, while Woodside Petroleum Ltd <WPL.AX> rose 2.3 percent and touched a one-week high; both were top boosts to the energy index.
Oil prices climbed more than 1 percent on Wednesday, lifted by expectations that an OPEC-led supply cut announced last week for 2019 would stabilise markets. [O/R]
Australian healthcare stocks <.AXHJ> clocked a second straight day of gains, rising 1.1 percent. Mayne Pharma Group <MYX.AX> was the best performer, rising more than 6 percent to its highest in more than a week.
Financials <.AXFJ> rose 2 percent with Westpac Banking Corp <WBC.AX> and Commonwealth Bank <CBA.AX> both ending above 2 percent, while Australia and New Zealand Banking Group <ANZ.AX> and National Australia Bank <NAB.AX> both rose almost 2 percent.
New Zealand's benchmark S&P/NZX 50 index <.NZ50> rose as much as 0.95 percent, its biggest intraday percentage gain in nearly two weeks.
Major online marketplace Trade Me Group <TME.NZ> boosted the benchmark, rising as much as 4.3 percent to a record high after agreeing to be acquired by a British private equity firm for NZ$2.56 billion ($1.7 billion). [L3N1YG4LX]
(Reporting by Aby Jose Koilparambil and Nikhil Subba in Bengaluru; Editing by Jacqueline Wong)
