SYDNEY (Reuters) - Australian shares rose 0.8 percent to hit five-year highs on Monday morning, with gains on Wall Street reinforcing positive sentiment ahead of a U.S. Federal Reserve meeting this week, though trading volumes were subdued.
Financials led, with National Australia Bank (NAB.AX) and Westpac Banking Corp (WBC.AX) climbing 1.6 percent and 0.6 percent respectively. Top lender the Commonwealth Bank of Australia (CBA.AX) added 0.4 percent.
Australia's top four banks have had a stellar year so far, rising on average 25.3 percent on the back of high dividend yields and record profits. The broader market has gained 13.1 percent this year.
The S&P/ASX 200 index (ASX:^XJO) rose 41.9 points to 5,261.5 by 0131 GMT, its highest since June 2008.
Miners supported the market, with BHP Billiton Ltd (BHP.AX) rising 0.5 percent and Rio Tinto Ltd (RIO.AX) up 1 percent. Gold miners Newcrest Mining Ltd (NCM.AX) jumped 5 percent and Perseus Mining Ltd (PRU.AX).
Around 137 million shares had traded hands by 02.22 a.m. British Time in cautious trade, well below the daily average for 2013 of 708.9 million shares.
"Clearly we're waiting for the U.S. and comments on tapering but that's been pretty well foreshadowed, so the market seems to be in a fairly good place at the moment," said Rohan Walsh, investment manager at Karara Capital.
"Growth outlooks are OK and interest rates are reasonably low and risk has declined."
Gains in U.S. stocks on Friday saw the Dow register its best weekly gain since January as markets prepared for the U.S. central bank's policy review, which ends on Wednesday.
Traders expect the Federal Reserve to trim its $85 billion in monthly bond purchases by $10 billion while leaving interest-rate policy highly accommodative.
Analysts said the market was also boosted by the news Lawrence Summers was no longer a candidate for the Federal Reserve chair. The market now sees Janet Yellen as the frontrunner to succeed of Ben Bernanke, and expect her to maintain his pro-growth policies.
Consumer staple retailer Woolworths Ltd (WOW.AX) and rival Wesfarmers Ltd (WES.AX) both added 0.7 percent, and top telecommunications service provider Telstra Corporation Ltd (TLS.AX) rose 0.6 percent.
Discovery Metals Ltd (DML.AX) slumped 10 percent to A$0.12, a 2-1/2 month low, after delaying a deadline for recommending a takeover offer for the fourth time.
Westfield Group (WDC.AX) rose 0.7 percent to two-week highs of A$10.92 after it agreed to sell stakes in seven U.S. shopping malls for $1.64 billion.
New Zealand's benchmark NZX 50 index <.NZ50> rose 0.5 percent or 22.6 points to 4,673.5.
(Reporting by Thuy Ong; Editing by John Mair)