(Updates to close)
By Nikhil Nainan
Oct 29 (Reuters) - Australian shares closed higher on Tuesday, extending its winning streak to seven sessions as investors banked on Beijing and Washington finalising a first-stage trade deal next month.
Hopes for a trade deal were boosted when U.S. President Donald Trump on Monday said he expected to sign a significant part of the deal with China ahead of schedule, but he did not elaborate on the timing. S&P/ASX 200 index .AXJO closed 0.1% higher at 6,745.4, its highest since Sept. 24. The benchmark was nearly flat on Monday, adding just 1.5 points.
"Are we being too optimistic? Less than a month ago, trade talks were on the verge of collapsing and recession risk was looming in the global economy," Margaret Yang, a Singapore-based market analyst for CMC Markets, said in a daily note.
"The memories are still fresh but fading faster than they were formed."
Mining stocks supported the gains on the day, with global miners BHP Group BHP.AX and Rio Tinto (LON:RIO) RIO.AX advancing 1.2% and 1%, respectively.
But investors sold off gold stocks .AXGD , as the improved outlook for a deal siphoned money away from safer bets.
Resolute Mining RSG.AX fell 6.2%, while the country's top gold miner Newcrest Mining NCM.AX ended 1.1% lower.
Investors were also looking ahead to a likely rate cut by the Federal Reserve on Wednesday, although the U.S. central bank could signal caution about further easing.
Banks held a soft tone on Tuesday, with the "Big Four" all declining, while Commonwealth Bank of Australia CBA.AX was roughly flat.
Australia and New Zealand Banking Group ANZ.AX kicks of bank earnings - which are expected to be weak - when it reports on Thursday.
Some investors will also be looking at Reserve Bank of Australia (RBA) Governor Philip Lowe's speech later on Tuesday. It comes ahead of third-quarter inflation data on Wednesday that will be closely watched, as a higher-than-expected figure could extinguish chances of a fourth interest rate cut this year.
Citigroup (NYSE:C) expects the RBA to embark on some form of quantitative easing - as early as February 2020 - due to the most recent rate cut not fully passing through to residential mortgages.
The note says this has "hampered the domestic component of policy transmission."
In New Zealand, the benchmark S&P/NZX 50 index .NZ50 ended 0.1% higher at 10,793.75, in its first trading day this week.
Markets were closed for Labour Day on Monday.