By Sandhya Sampath
Nov 7 (Reuters) - Australian shares scaled a near 10-year high on Monday, breaching the psychologically important 6,000 point mark, supported by strong commodities prices and tracking a rally in global equity markets.
The S&P/ASX 200 index .AXJO rose as much as 0.81 percent, or 48.42 points, to 6,002.20 at 0010 GMT, its highest level since February 2008. The benchmark fell 0.1 percent on Monday.
The rally was supported by strong oil and metal prices and comes ahead of the Reserve Bank of Australia's policy meeting later in the day, where the central bank is expected to stand pat on policy.
U.S. stocks climbed to record highs on Monday, helped by optimism about merger activity and expectations that a cut in corporate taxes would bolster earnings, while Asia shares excluding Japan .MIAPJ0000PUS rose to 10-year highs. .N MKTS/GLOB
"We are at a stage where although 6,000 is a psychological level, it is defined mainly by the valuations, which are quite stretched," said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.
He said it will be difficult for valuations to expand further unless the price-earnings ratio improves, a development that would be vulnerable to a sudden heightening in geo-political risks.
The broad-based gains on the index were led by energy and material stocks.
The Australian energy index .AXEJ rose as much as 2.1 percent, tracking an overnight surge in oil prices, which hit their highest level since mid-2015 after Saudi Arabia's crown prince cemented his power with an anti-corruption crackdown. O/R
Oil majors Woodside Petroleum Ltd WPL.AX and Oil Search Ltd OSH.AX rose as much as 2.5 percent each.
The mining and materials index .AXMM rose to its highest in over 3-years, boosted by an overnight surge in iron ore prices after China's top steel producing province surpassed its capacity reduction targets for the year. IRONORE/
Global miner BHP Billiton (LON:BLT) Ltd BHP.AX rose 3 percent to its highest since June 2015, while peer Rio Tinto (LON:RIO) Ltd RIO.AX climbed for a fifth straight session to its highest since Aug. 2011.
Australia's central bank holds its monthly policy meeting later in the session and is expected to keep its cash rate at a record low of 1.5 percent. New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.1 percent, or 10.28 points, to 8,043.35, on weak performance in consumer staples.
Dairy company a2 Milk Company Ltd ATM.NZ fell as much as 4.8 percent, while Synlait Milk Ltd SML.NZ dropped about 6 percent.
Financials and utilities stocks were also a major drag on the index.