By Colin Packham and Rebecca Howard
SYDNEY/WELLINGTON, May 25 (Reuters) - Australian shares bounced sharply off a two-week low on Wednesday, led by gains in the energy and resources sectors as strong data in the United States boosted commodity prices and Wall Street stocks.
The S&P/ASX 200 index .AXJO rose 1.7 percent, or 87.53 points to 5,383 by 0207 GMT. The benchmark fell 0.4 percent to a 2-week low on Tuesday.
"Housing data in the U.S. came out much better than expected and that lit a bit of a fire in the financial sector which has carried through to the local segment," said Chris Conway, head of research and trading, Australian Stock Report.
New U.S. single-family home sales recorded their biggest gain in 24 years in April, touching a more than eight-year high as purchases increased broadly, a sign of growing confidence in the economy's prospects. prices pushed higher overnight so that sector is also seeing some gains," Conway said.
Financial stocks led the index higher, rising 0.85 percent. Shares in Westpac Banking Corp WBKNZL.UL , Australia and New Zealand Banking Group ANZ.AX and Macquarie Bank Ltd MBL.UL all rose more than 2 percent.
Energy and resources firms also marked sizable gains thanks to gains in commodity and oil prices.
Shares in Woodside Petroleum Ltd WPL.AX rose more than 3 percent, while Origin Energy Ltd rose more than 4 percent after oil prices rose more than 1 percent. Global miner BHP Billiton (LON:BLT) BHP.AX jumped 3.5 percent.
On the negative ledger, shares in Wesfarmers Ltd WES.AX edged down almost 0.5 percent after Australia's biggest company by sales said it will take impairment charges totalling up to A$2.2 billion. Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.7 percent or 51 points at 6,922.65, as sentiment got a lift from better markets offshore.
Xero XRO.NZ was up 3.6 percent while Orion Health Group OHE.NZ added 3.5 percent. In the other direction Tower TWR.NZ continued to shed ground after its disappointing result, trading down 4.8 percent.
Domestically investors will be looking to the government's budget Thursday for direction.