Australian shares rise as gold and banks shine ahead of RBA's decision

Australian shares rose Monday, boosted by bank and gold stocks. This was ahead of the central bank's policy meeting scheduled for later this week. The markets expect the bank to maintain rates.

S&P/ASX 200 rose 0.6% by 0028 GMT to 8,842.10. The benchmark index had closed Friday 0.2% higher.

A poll shows that the Reserve Bank of Australia is likely to keep its cash rate at 3.60 percent on September 30. The tight labour market makes policymakers cautious, while they wait for clearer signs of inflation easing.

After multiple rate cuts during the year, the second quarter saw a rebound in the domestic economy and a steady jobless rate -- signs which could allow the RBA to ease its pace.

RBA Governor Michele Bullock repeatedly referred to trimmed mean inflation (RMI) as the most important indicator. The measure had fallen to 2.7%, a level not seen in three years. However, the bank's goal is 2%-3%.

The price of a rate reduction in November has dropped to less than 43% compared to a few weeks earlier.

Financial sub-index was the leader with a 1% gain on the local exchange. The shares of the 'Big Four banks' rose between 0.6% to 1.3%.

Banks' earnings can be boosted by higher or stable interest rates because they increase the difference between deposit and lending rates.

The bullion price rose, causing gold stocks to jump 1.7%. Genesis Minerals, Evolution Mining and other gold miners gained 1.2% and 2.5% respectively.

However, iron ore prices fell, and the decline in mining stocks led to a 0.3% drop. BHP fell by 0.9% while Rio Tinto, Fortescue and Fortescue each lost 1.5%.

The energy stocks fell 0.5% as well, following the fall in oil prices. Santos fell 0.6%.

The benchmark S&P/NZX 50 Index in New Zealand rose by 0.6%, to 13,190.34. (Reporting and editing by Harikrishnan Nair in Bengaluru, with Roshan Thomas reporting from Bengaluru)

(source: Reuters)