For a second day, a strong push towards 5500 was thwarted as gains were ceded through the afternoon and the S&P/ASX 200 Index briefly dipped into the red before closing up 4 points or 0.1 per cent to 5479.8. The All Ordinaries finished 7 points or 0.1 per cent higher at 5562.2.

The buoyant start was fuelled by a 3 per cent surge in oil prices after Russian president Vladimir Putin said the oil producing nation was prepared to join OPEC members in capping oil supply.

Unsurprisingly, the energy sector was the strongest performer, up 2.3 per cent on Tuesday. Materials also put in a strong session, up 0.9 per cent, as BHP Billiton hit a 2016 high of $23.80 on the oil news.

Consumer staples also posted a gain, helped by Woolworths which extended its gains to close up 0.5 per cent. Its shares have now risen almost 8 per cent in the past fortnight.

However, the real estate, healthcare and telecommunication sectors dragged, and ultimately a turn in financials led the Index lower. CSL was the biggest drag by weight, falling 1.1 per cent. The banks all closed flat to lower, with Westpac Banking Group posting the biggest loss down 0.4 per cent.

"There was a further nudge in expectations of what the Federal Reserve will do overnight," Patersons Securities economist Tony Farnham said. The market has now priced a 68 per cent chance of an interest rate rise in the US at its meeting in December, which weighed on bond prices and so-called bond proxy stocks.

The Australian dollar slipped off its footing above US76¢, falling as much as half a cent, buying US75.6¢ in late trade.

Mr Farnham said investors had plenty of US-based data and Fedspeak to digest later in the week that may lead to some hesitation, including Janet Yellen speaking on Friday, as well as retail sales and consumer sentiment numbers.

US third quarter earnings season also begins this week with Alcoa reporting first up.

Market movers

Oil

The price of crude oil jumped higher after Russia, the world's largest oil producer, said it was prepared to join an OPEC deal to limit production. Oil soared to a high of $US53.71, its highest level this year before levelling to $US53 throughout Tuesday. The rise followed Russian President Vladimir Putin's comments at the World Energy Congress in Istanbul. But Goldman Sachs warned that even with some production cuts the oil market was likely to remain in surplus next year.

Bonds

Bonds were heavily sold off throughout Tuesday, pushing the Australian 10-year bond yield to 2.246 per cent, amid growing expectations of a US interest rate rise. That is the sixth straight rise since last Monday. Bonds and equities are trending in the opposite direction at present, unlike a month ago, when markets reacted violently ahead of potential tightening of stimulus out of the US Federal Reserve and Bank of Japan meetings.

Business conditions

Business conditions picked up in September as sales and profits rebounded while a marked rise in forward orders pointed to further growth ahead, a survey shows. National Australia Bank's monthly survey of more than 500 firms showed its index of business conditions rose one point to +8 in September, to remain above its long-run average. Its index of business confidence held at +6, after bouncing 2 points in August.

Housing finance

Lending to housing investors grew by just 0.1 per cent in August, its slowest rate in four months, despite the Reserve Bank cutting the cash rate to a record low of 1.5 per cent at the start of the month.

But the number of owner-occupier home loan approvals is at a 15-month low after falling by 3.0 per cent in August. The value of housing finance approvals, including loans to investors as well as home-buyers, has also fallen, to $31.413 billion. That's 1 per cent down on July and at its lowest level since April.

Stock watch: Sirtex Medical

Healthcare stocks were out of favour during Tuesday's trade, with Sirtex Medical among them, closing 1.7 per cent lower to $29.97. It earlier fell as much as 6.2 per cent, a big drop for a stock that has remained tightly held this year.

UBS analysts maintained their 'buy' rating on the stock but cut its price target to $39, from $42.30, based on an analysis of the effect of a stronger-than-forecast Australian dollar on its earnings. According to UBS estimates, in 2017 77 per cent of Sirtex dose sales are in the Americas, 19 per cent in Europe and 4 per cent in Asia Pacific. The exchange impact in 2017 on its sales revenue is expected to be 2.3 per cent lower, from $264.2 million previously forecast to $258 million.

Six of 11 analysts on Bloomberg have a "buy" rating on the stock, with an average target price of $35.56.