* Banks bounce from heavy selling a day earlier
* Rates seen staying on hold
* Energy stocks up on oil recovery (Adds analysis, quotes, stocks on the move)
SYDNEY/WELLINGTON, Nov 3 (Reuters) - Australian shares rose on Tuesday as bank stocks bounced back from the previous session while investors waited for news from the Reserve Bank of Australia’s monetary policy meeting.
Most economists expect the RBA to keep rates on hold at Tuesday’s meeting, boosting the local dollar.
Bank stocks rallied as investors suspected the sector may have been oversold the previous session, and that a recent decision by major banks to raise their mortgage rates will help offset a slowdown in profit growth.
The S&P/ASX 200 index was up 1.3 percent or 65.7 points at 5,231.5 by 0120 GMT. The benchmark is down 3.3 percent so far in 2015.
“There was a lot of negativity in the banking sector yesterday, perhaps a little overdone,” said IG Markets analyst Angus Nicholson.
“It’s a big retracement, and that’s really helped send the market back up.”
Of the so-called “Big Four” banks, Commonwealth Bank of Australia, Westpac Banking Corp and Australia and New Zealand Banking Group were 1.5 percent higher, while National Australia Bank added 0.9 percent.
Energy stocks also firmed followed a recovery in the oil price overnight. Woodside Petroleum was up 1.8 percent and Origin Energy gained 1.9 percent while Santos jumped 4 percent following a major asset sale.
Iron ore miner BHP Billiton led resources higher, up 1.6 percent, while rival Rio Tinto gained 0.9 percent and BHP spin-off South32 was up 2 percent.
Telecoms giant Telstra was up 2 percent, a respite following a decline of close to 20 percent since early August on concerns about its long-term growth prospects.
Pension services company Link Administration fell 0.4 percent below its issue price in its market debut after raising A$950 million in Australia’s biggest initial public offering of the year.
New Zealand’s benchmark NZX 50 index rose 0.4 percent or 22.34 points to 6,006.18, not far from an all-time high touched last week. The index is up nearly 8 percent this year, far outperforming the Australian benchmark.
The most actively traded stock was Spark New Zealand , up 1.4 percent. NZX Ltd rose 1 percent after Credit Suisse raised its rating to outperform.
Shares in farmer-owned dairy exporter Fonterra fell 0.7 percent ahead of the global dairy auction Wednesday morning.
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Reporting by Byron Kaye and Swati Pandey; Editing by Eric Meijer