Sept 7 (Reuters) - Australia shares advanced on Thursday,...

Sept 7 (Reuters) - Australia shares advanced on Thursday, cheered by strength on Wall Street with the energy sector taking the lead from a rally in their U.S. peers, while global miner Rio Tinto jumped after it increased its coal reserve estimate.

Receding tensions on the Korean peninsula also supported the benchmark index (xjo), which rose 0.3 percent, or 16.37 points, to 5,706.10 by 0228 GMT, recovering from the previous day's 0.3 percent loss.

Shares on Wall Street were boosted by news that U.S. President Donald Trump sided with Democrats over his fellow Republicans and agreed to pass an extension of the U.S. debt limit until Dec. 15, potentially avoiding an unprecedented default on U.S. government debt.

"The markets are recovering from initial concerns created by the Korean bomb test over the weekend and are responding to Wall Street’s lead with some buying interest," said Ric Spooner, Chief Market Strategist at CMC markets.

The energy sector rode on the coattails of its U.S. counterparts, backed by an overnight rise in oil prices.[O/R]

Oil and gas heavyweights Woodside Petroleum (WPL) and Oil Search Ltd (OSH) were up 0.7 percent and 1.1 percent respectively. Utility stock Origin Energy (ORG) was 0.5 percent higher, while its larger peer AGL Energy (AGL) jumped 2.7 percent.

Rio Tinto (RIO) was the main attraction in an otherwise sluggish mining sector. Its shares rose 1.2 percent to a six-month high after the world's second-biggest miner increased the estimate of coal reserves by 50 percent at its 80 pct owned Kestrel mine in Queensland. 　

Rival BHP (BHP) shares, which traded ex-dividend, fell over 1 percent.

The financial sector .AXFJ, which was under pressure all week as its biggest constituent Commonwealth Bank of Australia (CBA) struggled with a money-laundering scandal, was about 0.2 percent higher.

CBA, which had slumped close to a nine month low on Wednesday, gained 0.6 percent. Its 'Big Four' peers Westpac (WBC) and National Australia Bank (NAB) were also among the top advancers , up 0.6 percent and 0.3 percent, respectively.

New Zealand's benchmark S&P/NZX 50 index (nz50) tacked on 0.1 percent to 7,799.25, supported by consumer and healthcare shares.

Dairy products maker a2 Milk Company (ATM) rose 1.4 percent while medical devices maker Fisher & Paykel Healthcare (FPH) was up 1.8 percent to a record high.

Gains on the main board, however, were capped by losses in industrials and utilities shares.

Air New Zealand (AIR) shares were the biggest drag on the index with a 2.6 percent decline.