The Australian sharemarket rallied from the red as weak Japanese and eurozone data bolstered hopes for central bank stimulus announcements in coming months.
The S&P/ASX 200 index was down 0.2 per cent in early trade but it reversed to close up 28.7 points, or 0.51 per cent, at 5658.5, on volume 25 per cent below average, after the Reserve Bank left interest rates on hold and surging Japanese stocks dragged regional markets higher.
The yen tumbled against the greenback after Japanese cars sales slumped 9.1 per cent to a three-year low, reviving expectations the Bank of Japan would be forced to ramp up its asset purchasing program to support sagging growth.
The Nikkei index jumped 1.3 per cent.
The Australian dollar fell US0.5 cents to US92.90 cents on reports of selling out of Europe ahead of the Reserve monetary policy decision where it remained steady after the cash rate was left unchanged at 2.5 per cent.
Government 10-year yields rose 1.7 points to 3.34.
The Reserve statement said the dollar remained "remains above most estimates of its fundamental value" and that a period of interest rate stability was expected.
US markets were closed last night but European markets reversed early weakness despite the regional composite manufacturing PMI sliding to the lowest level in 15-months, with Italy's index dropping into the contraction zone.
The data stoked hopes the European Central Bank would at least give stronger hints it was set to embark on a concerted asset purchasing program.
The Shanghai composite index was up one per cent at the close of the ASX as consumer stocks rallied on expectations government pledges to rebalance the economy would support consumer related stocks.
Spot iron ore fell 0.9 per cent to a fresh two-year low of $US87.1o a tonne on Monday while Dalian iron ore futures were per cent today.
Copper dropped 0.6 per cent to $US a tonne and gold fell $US5 to $US1281 an ounce as the US dollar rallied against major currencies.
New figures showed a decline in exports as a percentage of gross domestic product, but building approvals achieved stronger than expected growth.
CMC Market chief market strategist Michael McCarthy said the share market was boosted by a generally supportive environment.
"All of those things together have given the market modest confidence at current levels," Mr McCarthy said.
Trading volumes were still fairly light, he said.
Many investors are waiting on the release of Australia's economic growth figures on Wednesday, while the European Central Bank meets on Thursday and US jobs data will be released on Friday.
The big miners overcame early losses, with BHP Billiton up 20 cents at $36.90, Rio Tinto up 23 cents to $63.03 and Fortescue Metals one cent higher to $4.10.
The Senate on Tuesday agreed to repeal the former Labor government's mining tax.
Telstra was a strong performer, adding eight cents to $5.66.
The energy sector also lifted the market, with Origin Energy up 48 cents at $16.12, Santos up 25 cents at $15.10 and Woodside 60 cents higher at $43.67.
ANZ was the strongest bank, adding 18 cents to $33.61, while Commonwealth Bank gained 20 cents to $81.50 and National Australia Bank and Westpac were relatively flat.
The broader All Ordinaries index was up 27.5 points, or 0.49 per cent, at 5,656.8 points.
The September share price index futures contract was 33 points higher at 5,642 points, with 18,236 contracts traded.
National turnover was 1.64 billion securities worth $3.28 billion.