Dec 8 (Reuters) - Australian shares were higher for a third consecutive session on Thursday with broad-based gains on expectations that the European Central Bank would extend its current stimulus programme at its policy meeting later in the day.
The S&P/ASX 200 index was 1.2 percent, or 68.10 points, higher at 5,545.7 at 0119 GMT.
The benchmark added nearly 1 percent in the previous session when a contraction in quarterly GDP saw some investors hoping for more stimulus from local policymakers.
A jump in basic materials stocks drove up the main index, with major miners such as BHP Billiton, Fortescue Metals Group and Rio Tinto gaining in a range of 1 percent and 4 percent as iron ore prices rocket.
Rio Tinto and Fortescue were the top gainers on the index.
Sentiment was further elevated by expectations that the European Central Bank (ECB) will announce a six-month extension to its quantitative easing (QE) programme when it meets later in the day.
ECB President Mario Draghi said last week that the bank will look at a combination of policy tools in its meeting.
"I believe we are in a situation where we appear to be developing a bit of year-end optimism, wherein markets sort of react to anything positive," said Ric Spooner, chief market strategist at CMC Markets.
Even if the ECB extends its QR programme by six months beyond March, as expected, it will simply begin tapering six months later, Spooner noted.
Financial stocks held the upward momentum which began after Donald Trump was elected U.S. President, climbing to a 15-month high. Trump's impending presidency is widely expected to be likely to benefit financials.
The 'Big Four' Australian banks surged in a range of 1 percent to 2 percent.
Insurance Australia Group shone brightest among financials, up 3.4 percent at its highest in 3 months, after the insurer reaffirmed its full-year guidance.
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New Zealand's benchmark S&P/NZX 50 index was 0.25 percent, or 17.18 points higher, at 6,906.95. Gains in financial and consumer shares offset losses in telcos.
Insurer Tower Ltd was the biggest gainer among financials and on the main index, up 4 percent to its highest in nearly a month.
Australia and New Zealand Banking Group and Westpac Banking Corp, each adding 1.5 percent, were also among the top performers.
A2 Milk Company, up 2 percent, entered its fourth session of gains.
Spark New Zealand, which was nearly 2 percent lower, dragged down telcos.
Reporting by Rushil Dutta; Additional Reporting by Suhail Hasan Bhat in Bengaluru; Editing by Eric Meijer