The S&P/ASX200 rose 26.9 points, or 0.33 per cent, to 8,178.3, as the broader All Ordinaries gained 30.5 points, or 0.36 per cent, to 8,399.8.
Investors rejoiced after the White House announced it would hold trade talks with Beijing officials later this week and as China's central bank flagged plans to cut its key interest rate to boost economic growth.
"Obviously good news that China has cut its key lending rates, but what it indicates about trade talks is they're not overly optimistic," IG Markets analyst Tony Sycamore said.
"Yes, it puts more liquidity in the system, but if people aren't willing to borrow and aren't willing to spend, then you've got to get that fiscal stimulus.
"It feels like we're waiting for that next catalyst."
Nine of 11 sectors were trading higher by the close.
Miners and banks helped lift the bourse higher, but energy was the best-performing sector, up 2.1 per cent as oil prices recovered from recent lows.
Brent crude is trading at $US62.72 after slipping below the $US60 level twice in May.
Financials rose 0.5 per cent as NAB led the big four banks with a 1.6 per cent gain to $35.87 after its first half earnings beat expectations.
Investor selling momentum on Westpac slowed after the bank's underwhelming results on Monday disappointed investors. WBC shares lost less than 0.1 per cent on Wednesday to $31.79, while CBA fell 0.5 per cent.
Large cap miners helped push the materials sector higher, BHP rising 0.9 per cent as China announced its tactical stimulus measures.
Gold prices rolled over US-China trade talk hopes softened demand for the safe haven, with futures trading roughly $US100 short of their $US3,500 an ounce peak.
Buy now, pay later play Zip Co was the top 200's best performer, rallying 13 per cent to $1.83 after announcing it would double its earnings this financial year.
Health care stocks were the worst performing sector, down 1.5 per cent as CSL fell sharply lower for a second straight day after US President Donald Trump signed an order to boost US pharmaceuticals ahead of planned tariffs for the sector.
The Australian dollar is holding at four-month highs to buy 64.83 US cents, up from 64.58 at Tuesday's ASX close.
The US Federal Open Market Committee will release its funds rate decision overnight and, while any change to monetary policy is extremely unlikely, investors will watch closely for indications of what could spark a rate cut in future.
"We're in a bit of a holding pattern," Mr Sycamore said.
"We're still missing the reason for this market to rebound and test those highs."
ON THE ASX:
* The benchmark S&P/ASX200 index finished Wednesday 26.9 points higher, or up 0.33 per cent, to 8,178.3
* The broader All Ordinaries as the broader All Ordinaries gained 26.9 points, or 0.33 per cent, to 8,339.8
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 64.83 US cents, from 64.58 US cents on Tuesday at 5pm
* 92.66 Japanese yen, from 92.77 Japanese yen
* 57.03 Euro cents, from 56.98 Euro cents
* 48.53 British pence, from 48.52 pence
* 108.01 NZ cents, from 107.97 NZ cents
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