By Aaron Saldanha
Dec 19 - Australian shares rose on Tuesday, as firmer commodity prices supported mining stocks and optimism around U.S. tax reform bolstered global investor sentiment.
Wall Street indexes hit record closing highs on Monday on rising optimism about lower corporate tax rates as the Republican tax bill moved closer to passing.
Republican U.S. Senator Susan Collins said on Monday she would vote for the tax overhaul, which her party's leaders hope to push through Congress this week, all but ensuring its passage.
"We have got an M&A cycle going through a number of sectors, it is really hard to see the market fall," said Mathan Somasundaram, a market portfolio strategist at Blue Ocean Equities. "The U.S. is going up, they have got tax cut optimism playing through...downside risk is very limited in the short-term."
The S&P/ASX 200 index .AXJO was up 0.5 percent, or 29 points, at 6,067.9 by 0054 GMT. The benchmark rose 0.7 percent on Monday.
Mining heavyweight BHP Billiton's shares rose as much as 0.9 percent to their highest in more than a month on strong nickel prices.
Benchmark nickel on the London Metal Exchange hit three-week peaks on Monday after China boosted expectations of higher demand by pledging to cut export taxes on some steel products, but sizeable inventories capped gains.
Mining peer Rio Tinto also gained and was trading about 0.4 percent higher.
The financials index rose to its highest in nearly a week, driven mostly by Australia and New Zealand Banking Group Limited , which was trading 0.8 percent higher.
The lender had said on Monday it would start buying back up to A$1.5 billion ($1.15 billion) of its shares on-market, as it begins returning surplus capital to shareholders after a series of divestments.
"You have got a lot of dividends in the retail space that are flowing back in because they would have hit the bank accounts in the last week," added Blue Ocean Equities' Somasundaram.
Meanwhile, New Zealand's benchmark S&P/NZX 50 index was 0.4 percent, or 29.72 points, higher at 8,373.87 due to consumer staples and utility stocks.
a2 Milk Company Ltd and Meridian Energy Ltd were the top contributors to index gains, respectively. a2 Milk was as much as 1.6 percent higher while Fletcher Building was trading 1.4 percent higher. ($1 = 1.3045 Australian dollars) (Reporting by Aaron Saldanha in Bengaluru; Editing by Sam Holmes) Keywords: AUSTRALIA STOCKS/ MIDDAY