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Jan 4 (Reuters) - Australian shares drifted in a narrow range on Wednesday, with a slight upside bias extending the previous session's 19-month high. Weaker commodity prices neutralised leads from Wall Street overnight.
Wall Street shares rose sharply on Tuesday, after powering ahead for two months on expectations that the Trump Administration will stimulate the economy with tax cuts, infrastructure spending and financial deregulation.
The S&P/ASX 200 index was flat at 5,733.8, up 0.6 points or 0.01 percent at 1245 GMT.
"One of the things we are expecting this year is further increases in volatility. The outlook globally remains mostly positive but there are very significant risks," said Michael McCarthy, chief market strategist at CMC Markets.
"Markets continue to gyrate wildly around that central case of a modestly improving global economy," he added.
Financials led overall gains, with Commonwealth Bank underpinning the market. The other three "Big Four" banks rallied as well.
Material stocks continued their climb, but growth was restricted by dips in copper, iron ore and oil prices.
Oil prices slipped more than 2 percent on Tuesday, as the U.S. dollar rallied to its highest point since 2002, and traders booked profits.
Oil major Woodside Petroleum fell 0.5 percent, undermining the energy index's solid rally last week.
A higher U.S. dollar also hurt copper, which backtracked from its two-week high on Tuesday.
Iron ore on China's Dalian Commodity Exchange settled down 0.7 percent at 550.5 yuan a tonne.
Iron-ore major Rio Tinto fell 1.3 percent in thin trading, while BHP Billiton shaved off some early gains.
A higher closing in China steel prices on Tuesday, however, helped Fortescue Metals Group, which rose 1.7 percent.
Gold miners Oceana Gold Corp and Evolution Mining rose on the back of stronger gold prices, that firmed a percent to flirt with three-week highs.
Real-estate was the worst-performing sector on the S&P/ASX 200, erasing 0.08 percent from the index.
Shopping-centre operator Scentre Group fell 1.5 percent after two weeks of solid gains.
New Zealand's benchmark S&P/NZX 50 index started the year 0.8 percent or 53.53 points up, at 6,934.75, hitting its highest in nearly five weeks. Gains were largely led by industrial and material stocks.
Health care shares helped the rally as well, with retirement villages operator Arvida Group hitting a record high.
ANZ Banking's New Zealand shares rose 2.7 percent to their highest in 16 months, while Auckland International Airport jumped 2.7 percent.
A2 Milk was among the losers, after international milk prices posted their largest fall in three months at the year's first auction early on Wednesday.
For more individual stocks activity click on (Reporting by Aparajita Saxena; Additional reporting by Shashwat Pradhan in Bengaluru; Editing by Eric Meijer)