By Robb M. Stewart 
 

MELBOURNE, Australia--Australia's stock market racked up its strongest one-day gain since mid-February on Tuesday as investors shrugged off the worries that had weighed heavily on sentiment in recent days.

Bank shares offered the biggest boost to the local market, resuming a recent recovery interrupted over the past couple of days, while broad buying also lifted resources stocks despite a further slump in crude-oil and iron-ore prices.

The S&P/ASX 200 finished up 106.4 points, or 1.9%, at 5581.4. That took back a big chunk of the nearly 125-point fall over the previous two trading sessions as worries built over Greece's worsening debt crisis and the continued fall in Chinese shares.

Australia's central bank during the day opted to leave its benchmark cash rate on hold at a record-low 2%, as expected, and made only a passing reference to China and Greece. RBA Gov. Glenn Stevens gave little away about where rates are heading or when, although a number of economists continue to expect at least one more cut this year.

"While today's gains are encouraging, I still feel the ASX 200 remains largely range-bound with upside likely to be capped in the 5600 region," Stan Shamu, a market strategist at IG in Melbourne, said.

Shares in the largest banks, which are sought by investors for their attractive dividend yield but have faced heavy selling from late March highs, were all higher for the day.

Commonwealth Bank, the largest lender by market value, ended up 1.6%, although it remains almost 9% below its March closing high. Westpac jumped 3.9%, while Australia & New Zealand Banking and National Australia Bank added 2.6% and 2.2%, respectively. Investment bank Macquarie rose 1.3%.

Among energy shares, Santos lost 0.5% but Woodside Petroleum added 1.5% and Oil Search gained 3.1%.

BHP Billiton rose 0.9%, Rio Tinto gained 1.1% and iron-ore producer Fortescue Metals Group climbed 4.1% despite the price of the steelmaking ingredient falling another 3.9% on Monday to US$52 a metric ton.

Qantas Airways, which benefits from a fall in oil prices, advanced 7.9%.

Write to Robb M. Stewart at robb.stewart@wsj.com

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