SYDNEY: Australian shares gave up early gains to close flat on Tuesday, as fresh restrictions to contain a spike in coronavirus cases in the country's second-largest state dented investor confidence.

Authorities in Victoria said they would reimpose stay-at-home restrictions in metropolitan Melbourne and one regional area in the state after a daily record rise in Covid-19 cases.

The S&P/ASX 200 index settled down 0.03% at 6,012.9, after rising 1% in intraday trade on promise of further central bank support for the economy and strength in broader Asia.

The main cause of volatility was the rise in infections in Victoria, said IG Markets analyst Kyle Rodda, adding that a lockdown in Victoria was extremely important due to its effect on the state's contribution to the general economy.

Financials slipped, with the "big four" lenders in the red.

Mining stocks gained nearly 2%, helped by robust iron ore prices on doubts about a recovery in shipments from Brazil.

Global miner BHP Group advanced 1.3%, while iron ore-focused Fortescue Metals Group jumped 6.3%.

The number of issues on the ASX that advanced were 749 while 897 declined.

New Zealand's benchmark S&P/NZX 50 index ended 0.8% higher, helped by gains in healthcare stocks including Fisher & Paykel Healthcare Corp.

The Reserve Bank of Australia (RBA) left its cash rate steady as widely expected, while reiterating that it stood ready to ease policy further if necessary.