News: XIJ Australian shares rise as Ukraine hopes lift sentiment; banks shine

• Financials lead gains; tech stocks up
• Commodity-linked shares biggest drag
• Ampol up 3% after selling NZ petrol unit

(Updates to close)

Australian shares rose more than 1% on Monday, aided by gains in financial and healthcare stocks, as global investor sentiment was boosted by hopes for progress in peace talks between Ukraine and Russia even as the conflict continued to escalate.

The S&P/ASX 200 index (xjo) ended 1.2% higher at 7,419.4. The benchmark had dropped 0.9% on Friday, posting its worst weekly performance since Feb. 25.

Even as Russian missiles hit a large Ukrainian base near the border with Poland on Sunday, both sides showed promising signs for prospects of talks.

Heightened geopolitical tensions, along with surging global inflation, have weighed on riskier assets since late February, with markets closely eyeing the U.S. Federal Reserve's next move to rein in higher prices.

The Fed is widely expected to lift rates by 25 basis points in its meeting later this week, while the Bank of England is seen raising rates to 0.75% on Thursday.

In Australia, financials .AXFJ emerged as the top gainers on the benchmark index, rising about 2.5% to their highest since Feb. 24. The 'Big Four' banks advanced between 1% and 2%.

"The Australian market seems to be having a relief rally for the day and also considering that there is no impetus for the Federal Reserve to change its stance as far as raising rates goes, the banks are taking some solace from that," Brad Smoling, managing director, Smoling Stockbroking, said.

Technology stocks .AXIJ rose 0.6%, with Xero Ltd (XRO) gaining 1.2%, while healthcare shares .AXHJ climbed more than 2%.

Among losers, miners .AXMM fell the most, down 0.7% as iron ore futures slumped after rising COVID-19 cases in China, the world's largest steel producer, fuelled economic slowdown worries.

Energy shares .AXEJ reversed course to close slightly lower, as crude prices slipped from multi-year highs, while gold stocks .AXGD dipped about 0.4% as investors left the metal for riskier assets.

Fuel supplier Ampol Ltd (ALD) rose 3.2% on selling its New Zealand unit Gull for NZ$572 million ($389.53 million).

New Zealand's benchmark S&P/NZX 50 index (nz50) slipped about 0.1%, or 16.3 points.