Australian shares closed nearly flat on Tuesday as gains in material and energy stocks were offset by losses in gold stocks and a scrutiny-ridden financial sector. The S&P/ASX 200 index closed 0.04% down at 6,847.30 after recording its best gain in seven month on Monday.

Trade deal optimism, fading Brexit woes and rising hopes of an interest rate cut in February had helped the benchmark index add over 2% in the last two sessions.

"We're coming off the back of a very strong session yesterday and a bit of profit taking as we get close to the end of the year," said Steven Daghlin, market analyst at CommSec.

The non-committal move, Daghlin said, was also because it was that part of the year when volumes and amount of money flowing into the market dries up completely.

Weighing the most on the benchmark was the more than 1% drop in gold stocks as Newcrest Mining slipped 2% and Evolution Mining 1.7%.

The Australian gold space has seen a rise in deals as the domestic miners expand their portfolios amid higher bullion prices.

Meanwhile, financial stocks slipped into the red, led by a 0.9% drop in Westpac Banking Corp, which is set to be investigated by the country's banking regulator on whether the bank directors and executives broke the law as part of the bank's money laundering scandal. Shares of Australia and New Zealand Banking Group Ltd edged higher after it decided to refund owners of 3.4 million customer accounts for past wrongs and its board survived an investor vote over executive pay.

New Zealand's benchmark S&P/NZX 50 index rose 0.3% or 34.01 points to finish the session at 11,260.

Shares of Air New Zealand gained 1.6%, while A2 Milk Company rose 0.4%.