Australian shares rose the most in a month on Monday, shrugging off weaker US markets, as investors swooped on cheap bank stocks after months of selling and as a rebound in iron ore prices triggered the demand for resources stocks.

Trading was light because of public holidays in the United States, the United Kingdom, Germany, France and Hong Kong, so investors looked past global factors and picked stocks that have been sold off in recent months, dragging the market down some 5 per cent since early April.

The S&P/ASX 200 index rose 63.2 points or 1.1 per cent to 5,727.9 by 0238 GMT, its biggest single-session advance since April 24.

“It’s popping the price up faster than it would normally because there isn’t the same amount of volume in the market,’’ said IG Markets strategist Evan Lucas.

Banks led the across-the-board gains, after being sold down because of concerns that tough new capital requirements will limit dividend growth.

Commonwealth Bank of Australia and Australia and New Zealand Banking Group rose 1.2 per cent each, while Westpac Banking Corp and National Australia Bank added 0.8 per cent.

Miners also firmed after the spot price of iron ore ended the previous week with a gain. BHP Billiton and its newly-listed spin-off of non-core assets, S32, both gained 1 percent, while Rio Tinto advanced 1.7 per cent.

Smaller iron ore rival Fortescue Metals Group jumped 4 per cent.

Energy stocks rose even after oil price declined, with Woodside Petroleum up 2.3 per cent, Oil Search gained 1.3 per cent and Santos jumped 2.7 per cent.

Airline Qantas, which benefits from lower fuel prices, rose 2.6 per cent.

Nickel developer Sirius Resources jumped 22 per cent and recruiting firm Skilled Group rose 12 per cent, both after receiving takeover approaches.

New Zealand’s benchmark NZX50 share index rose 25.50 points or 0.4 per cent to 5,801.61, boosted by a jump in the utilities sector after Contact Energy announced a special dividend.

Shares in the energy generator and retailer jumped 14 per cent as investors cheered the company’s decision to pay out cash in the absence of investment opportunities in the sector.

Contact’s gains boosted the sentiment in other power companies, nudging Mighty River Power 0.4 per cent, while utilities investors Infratil rose 0.3 per cent.

Bathroom fixture maker Methven rose 0.9 per cent after it announced a 21 per cent rise in full-year profits.

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