* Finacials and materials stocks lead Aussie higher
* Higher iron prices boost mining stocks
* Disappointing results from Cochlear and Challenger cap gains
* NZ rises on a2 Milk surge
By Aditya Soni
Aug 14 (Reuters) - Australian shares rebounded sharply on Tuesday, led by a rally in banks and materials stocks, though underwhelming results from some blue chips capped the gains.
The S&P/ASX 200 index .AXJO rose 0.8 percent or 50.70 points to 6,302.900 by 0200 GMT. The benchmark slipped 0.4 percent on Monday.
Financials firmed .AXFJ 0.9 percent on Tuesday, leading the gains on the benchmark.
Top lender Commonwealth Bank of Australia CBA.AX rose 1.4 percent, while Australia and New Zealand Banking Group Ltd (ANZ) ANZ.AX firmed 1.5 percent to a nine-month high.
ANZ said impaired assets fell 36 percent in the third quarter due to stricter credit controls. Australia Bank Ltd NAB.AX rose 1.5 percent to a two-week high after investors also took in stride a 3 percent fall in third-quarter cash profit.
James McGlew, executive director of corporate stockbroking at Argonaut, said the result was in line with market expectations and the provisions they had flagged were not as severe as the market had expected.
"If people want return on their money, you're better off owning the banks than having your money in the banks."
Australia's "big four" banks control about 80 percent of the country's deposit and home loan markets, making them some of the world's most profitable banks.
Meanwhile, a jump in Dalian iron ore futures DCIOcv1 also boosted investor appetite for materials stocks, driving the metals and mining index .AXMM 0.6 percent higher.
Anglo-Australian miner BHP BHP.AX firmed 1.8 percent, pushing the benchmark higher, while rival Rio Tinto (LON:RIO) Ltd RIO.AX strengthened 0.4 percent.
Chile's copper industry on Monday braced for a potential strike at the BHP-owned Escondida, the world's biggest copper mine, as government-led mediation was expected to close by day's end. year, a 44-day walk-out at the mine had a global impact and slashed economic growth in the South American country.
Bucking the sector trend, gold miners slipped as prices of the precious metal sank below $1,200 per ounce on Monday to their lowest since late January 2017. GOL/
Resolute Mining Ltd RSG.AX fell as much as 4 percent before trimming some of the losses, while Northern Star Resources Ltd NST.AX dipped 0.9 percent.
Bionic-ear maker Cochlear Ltd COH.AX and investment management firm Challenger Ltd CGF.AX fell sharply after reporting disappointing results, putting a lid on the benchmark.
Cochlear dipped as much as 7.9 percent to a near four-month low after posting a 10 percent rise in its net profit to A$245.8 million ($178.72 mln), in line with the company's guidance.
While the results were higher year on year, they missed market expectations, McGlew said.
"I think with Cochlear, their investors more than anything were looking for an excuse to take profits off the table following a remarkably strong 2018," McGlew added.
Challenger Ltd CGF.AX slumped as much as 9.3 percent, its steepest intraday percentage loss in more than two-and-a-half years after reporting an 18.9 percent decline in annual profit.
Fast-food chain Domino's Pizza Enterprises Ltd DMP.AX traded 9.1 percent lower, after at one point lost 13.2 percent after its full-year underlying profit missed expectations.
In New Zealand, the benchmark S&P/NZX 50 index .NZ50 rose 0.5 percent,or 41.58 points, to 8,985.92.
Consumer staples accounted for nearly half the gains, with dairy firm a2 Milk Company Ltd ATM.NZ surging 3.3 percent to a four-week high. ($1 = 1.3753 Australian dollars)