Australian shares jumped to a three-week peak on Tuesday, after a rebound in iron ore prices prompted investors to buy recently battered resource stocks, while AGL Energy soared on plans to sell assets and cut costs.

The S&P/ASX 200 index leapt 0.8 per cent to 5770.20 by 03:55 GMT to mark a fourth session of gains.

The benchmark is up nearly 3 per cent since slipping to its weakest in four months last week. Some analysts, however, remain cautious on the outlook.

“There are a lot of bargain hunters, but they are not buying with a lot of conviction,’’ said Ben Le Brun, market analyst at OptionsXpress, pointing to low trading volumes.

The market was driven up by across-the-board gains with mining companies making large advances. Iron ore producer Fortescue Metals Group was the stellar performer, up 8 per cent on a media report that Chinese firms had applied to buy a stake.

Resource stocks had already been in demand after the prices of iron ore, Australia’s top export earner, jumped 6 per cent in three sessions. Rio Tinto and BHP Billiton were up more than 1 per cent each.

Overall, utilities was the top performing sector with a 2.45 per cent gain, largely thanks to gas and electricity retailer AGL Energy which announced around A$1 billion of asset sales and A$200 million of cost cuts by the end of 2016-17.

AGL shares leapt 7 per cent to reach their highest since 2008.

Banks extended gains with Westpac Banking Corp leading the pack with a 1.7 per cent rise. Australia and New Zealand Banking Group and National Australia Bank gained around 1.2 per cent each, while Commonwealth Bank of Australia was up 0.7 per cent.

New Zealand shares

Across the Tasman sea, New Zealand’s benchmark NZX50 share index was little changed at 5,806.13, as losses in casino operator SkyCity Entertainment held back gains in construction-related share and utilities

SkyCity fell 1.1 per cent to NZ$4.34, retreating from a near two-year high of NZ$4.39 ($3.21) hit the previous day, after the company unveiled updated plans for its convention centre in Auckland which would be costlier yet smaller than original plans.

Further index losses were limited by gains in energy generator and retailer Meridian Energy , which rose 1.3 per cent, while construction materials maker Fletcher Building pushed up 0.5 per cent.

SkyTV gained 0.6 per cent to hit a near six-month high of NZ$6.45 after the cable television operator announced a tie-up with Vodafone New Zealand to offer broadband services.

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