Australian shares closed higher on Tuesday, as major financial stocks recovered after the central bank kept interest rates unchanged, though gains were capped due to losses in index heavyweight Westpac Banking Corp.

The S&P/ASX 200 index closed up 0.2%, or 10.20 points, to 6,686.90. The Reserve Bank of Australia, at its November policy meeting left the door open to further stimulus if needed.

A pause on rate-cut will ease pressure on the banks' margins, which have been hit due to three rate reductions announced by the central bank this year.

The financial sub-index edged up after six sessions of declines as three of the "Big Four" banks added between 0.4% and 0.8%, with No. 3 lender National Australia Bank Ltd rising 0.6%.

Shares of Westpac fell 2.6% to a five-month closing low, after the bank on Monday warned of weak trading conditions. It reported a fall in annual profit. Lenders recorded a stretch of losses recently after weak results from Australia and New Zealand Banking Group and Westpac raised concerns on the sector's health.

Energy stocks advanced 0.9%, buoyed by a rally in oil prices, with Woodside Petroleum, the country's biggest oil and gas explorer rising 1.2%, while Oil Search advanced 0.7%. Trade-sensitive mining stocks also lent support to the local benchmark, with the sub-index rising 0.3%. Major players BHP Group and Rio Tinto added 1.3% and 1.2%, respectively.

Gold stocks, however, dropped 2.2% as increased optimism over a US-China trade deal capped gains for the safe-haven bullion. Newcrest Mining and Evolution Mining shed 2% and 2.8%, respectively.

New Zealand's benchmark S&P/NZX 50 index added 0.4%, or 39.99 points, to 10,801.55. Fletcher Building rose 3.2% and Ryman Healthcare gained 2.3%.