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SYDNEY, Aug 1 (Reuters) - Australian shares rallied to a near one-year high on Monday, as growing speculation of a rate cut by the Reserve Bank of Australia this week drove more investors out of bonds and into equities.
The S&P/ASX 200 index .AXJO ended up 25 points, or 0.45 percent, at 5,587.4.
The central bank will hold its monthly policy meeting on Tuesday, and a majority of economists expect an interest rate cut of 25 basis points to a new low of 1.5 percent.
Bonds yields are already at record lows in Australia and stand to drop further if rates are cut.
New Zealand's benchmark S&P/NZX 50 index .NZ50 was largely unchanged, up 0.1 percent at 7,356.6, as investors tread water ahead of the corporate earnings season.