Australian shares climb on bank, miner strength ahead of RBA decision

Nov 3 (Reuters) - Australian shares rose on Tuesday, led by banks and miners, while a sharp overnight drop in oil prices and hopes of easing Middle East tensions lifted sentiment ahead of the central bank's policy decision due shortly.

The S&P/ASX 200 index .AXJO rose 0.4% to 8,891.90 by 2325 GMT. The benchmark had slipped 0.6% on Monday.

Miners .AXMM snapped a three-session declining streak, adding 1.4% on stabilising iron ore and recovering copper prices. IRONORE/ MET/L

BHP BHP.AX and Fortescue FMG.AX rose around 0.5% each.

The gold stocks' sub-index .AXGD surged 3%, on track for its strongest session since mid-October, after the bullion rebounded from a one-year low overnight. GOL/

Airlines, which have been struggling with elevated fuel costs, got a boost from a 7% fall in oil prices overnight as talks between Iranian and Qatari officials lifted hopes for an end to the Iran war.

Qantas Airways QAN.AX was the biggest gainer among individual stocks, surging 6.4% while Virgin Australia VGN.AX jumped 8.3%.

The oil price drop sparked a 4% decline in energy stocks .AXEJ which were set for their biggest fall since June 15.

Woodside Energy WDS.AX and Santos STO.AX lost around 4% each.

Meanwhile, financials .AXFJ rose 0.5%, with the "big four" banks gaining 1.4% to 0.3%.

Investors were keenly awaiting the Reserve Bank of Australia's monetary policy decision due later in the day.

Hot inflation data and hawkish comments from policymakers have lifted the chances of a fifth rate hike to nearly 90%, from just 25% a couple of weeks ago. 0#AUDIRPR

Another hike could put more pressure on equities, especially consumer-facing stocks. Companies including Wesfarmers' hardware unit Bunnings, furniture retailer Nick Scali and property firm Mirvac flagged weaker demand last month, as households curbed spending amid higher borrowing and fuel costs.

In New Zealand, the benchmark S&P/NZX 50 index .NZ50 inched 0.1% lower to 13,685.05.