* U.S.-Mexico deal helps ease trade tensions, buoying sentiment
* Financials the biggest gainers, amidst inquiry findings
* Material stocks continue to rise on higher commodity prices
By Nikhil Nainan
Aug 28 (Reuters) - Australian shares climbed over half a percent on Tuesday, buoyed by a record close on Wall Street and a trade deal between the United States and Mexico that investors hoped would ratchet back rising global trade tensions.
Investors are now watching to see if Canada agrees to the new terms to overhaul the North American Free Trade Agreement (NAFTA). Similarly, indications that Washington is pressing the European Union to speed-up tariff talks added to the more upbeat tone.
The S&P/ASX 200 index rose 0.7 percent, or 43.1 points to 6,312 by 0200 GMT. The benchmark closed 0.4 percent higher on Monday.
Financial stocks were the biggest winners with the ‘Big Four’ banks leading the way, even as a damning Royal Commission inquiry into the sector continues.
Westpac Banking Corp was up as much as 2.6 percent, while Commonwealth Bank of Australia and National Australia Bank, whose pension funds were criticised in initial findings by the inquiry, also rose 1.3 percent and 1.5 percent, respectively.
Among resources firms, recent gains in commodity prices have helped buoy miners, with the sector index up 0.6 percent.
If the United States and Canada can reach a deal, Mathan Somasundaram, a Blue Ocean Equities market portfolio strategist, said “Aussie firms with production in the U.S., the packaging companies and all those things, they will probably benefit slightly from it.”
Galaxy Resources rose as much as 10.8 percent, after South Korean steelmaker POSCO signed a deal to buy lithium mining rights owned by the company in Argentina for $280 million.
Vitamin maker Blackmores Ltd surged and was the top percentage gainer on the benchmark. It was last up nearly 8 percent after posting a jump in full-year profit.
Despite rising oil prices, gains in the local energy sector were held back by a 6.8 percent fall in Caltex Australia .
The oil refiner said higher costs kept its half-yearly profit at the low end of its guidance, while saying it was also considering selling certain retail assets.
New Zealand’s benchmark S&P/NZX 50 index edged higher, rising 0.1 percent to 9,214.02.
a2 Milk Company and Synlait Milk helped drive the index higher but the gains were capped by a 3.6 percent drop in Tourism Holdings Ltd
In other news, Prime Minister Jacinda Ardern announced the formation of a business council to advise her on major issues facing the economy, in response to sinking business confidence. For more individual stocks activity click on (Reporting by Nikhil Kurian Nainan in Bengaluru, additional reporting by Aaron Saldanha; Editing by Kim Coghill)