The benchmark S&P/ASX 200 Index closed up 45.4 points, or 0.8 per cent, at 5891.5, while the broader All Ordinaries Index ended up 45.6 points, or 0.8 per cent, at 5861.9. For the three months to the end of March, the indices were up nearly 9 per cent, making it the best first quarter for the wider index in 24 years.

Buying on Tuesday was driven by improved global sentiment on Monday night and the prospect of another Reserve Bank of Australia cut in the cash rate as early as next week.

A gathering view that the RBA will not wait until May to ease again, and could end up cutting a third time this year, is proving positive for yield stocks. Utilities companies – a traditional target for income-focused investors – were one of the best-performing corners of the ASX 200, up 1.4 per cent.

February aggregate credit data released on Tuesday shows that while housing loan growth remains strong, it won't be enough to cut short the central bank's easing cycle.

However, Perpetual Investments' head of investment market research, Matt Sherwood, said RBA easing also reflected fundamental weakness in the economy, which would, ultimately, be bad news for stocks.

"I tend to think that rate cuts are having less and less of a productive impact on the Australian economy and on earnings," Mr Sherwood said.

"It might further stretch the search for yield but in the end, we tend to think these rate cuts are, ultimately, reflecting a weaker economy and, therefore, there is going to be some dampening effect on earnings expectations.

"The economy is very soft. It's very hard to see from domestic factors, at least, that the market will gather enough momentum to push it and sustain it above 6000," he said.

The Australian market also took a cue on Tuesday from a surge in Chinese equities, driven higher by government moves to clear stock from the country's property overhang.

Resources giant BHP Billiton was one beneficiary, up to 3.1 per cent at $31.03, while competitor Rio Tinto was ahead 2.5 per cent to $57.23. Fortescue Metals Group also bounced nearly 2 per cent, to $1.96, after being pummelled in recent days by the sliding iron ore price.

This was despite another drop, of 0.9 per cent, in the spot price for iron ore landed in China on Monday night, to $US52.69 a tonne. Futures trading suggests a further fall when it is next priced.

The big four banks all took heart from the prospect of further monetary easing, along with the continued expansion of credit in most categories, although their gains moderated through the session.

Commonwealth Bank of Australia rose 0.3 per cent to $93.40, while Westpac Banking Corporation moved ahead by 0.6 per cent to $39.38. ANZ Banking Group advanced 0.7 per cent to $36.64 and National Australia Bank by 0.6 per cent to $38.55.

Telstra Corporation lifted 0.3 per cent to $6.31.

Wesfarmers, owner of Coles, jumped 1 per cent to $43.96, while rival Woolworths was broadly flat at $29.54.

The spot price of gold was down about 0.3 per cent at $US1183.07 per ounce. However, Australia's biggest gold producer, Newcrest Mining, ended the day up 0.6 per cent at $13.37.

Australia's biggest oil producer, Woodside Petroleum, also finished strongly, up 1.5 per cent to $34.52, even as Brent crude oil dropped another 0.8 per cent to $US55.85 a barrel.

Industrials was the worst-performing ­sector, up just 0.1 per cent, while materials was the top performer, up nearly 2 per cent.

Information technology was close behind, up just shy of 2 per cent, as investors took heart from the strength of two sharemarket debuts, by mobile marketing business OtherLevels and digital payments software company Touchcorp. Both traded at healthy premiums to their initial pricing throughout the day.

G8 Education was the worst-performing stock in the ASX 200, plunging more than 5 per cent to $3.36 .

Primary Health Care was the best-performing stock, climbing 7.8 per cent to $5.50.