Australian shares rose on Tuesday, supported by miners, as hopes of a compromise in the US fiscal crisis and comments from the Reserve Bank that it was open to interest rate cuts boosted sentiment.

The benchmark S&P/ASX 200 index ended 24.3 points, or 0.6 per cent, higher at 4385.7, adding to Monday's gain of 0.6 per cent.

Leading US lawmakers expressed confidence they could reach a deal to avert the "fiscal cliff", a toxic $US600 billion combination of earlier failed budget deals. Republican and Democratic leaders have agreed on a framework to reform the tax code and government benefit programs next year.

Bellwether miners BHP Billiton and Rio Tinto climbed 1.1 per cent and 1.4 per cent respectively.

"There's some optimism at the moment about the Americans doing something constructive about their fiscal cliff problem," said Damien Boey, equity strategist at Credit Suisse. "People have also been a bit more inspired by the fact that the RBA is willing to cut rates into this cycle."

The Reserve Bank said it was still open to interest rate cuts but judged it appropriate to leave policy unchanged earlier this month due to a pick-up in inflation at home and a slightly more positive global backdrop.

US markets will be closed on Thursday for the Thanksgiving holiday.

Lynas Corp soared 4 per cent after it said it expects to start processing rare earth minerals from a plant in Malaysia next month, despite opposition from environmentalists over health concerns.

Origin Energy jumped 3.2 per cent, after media reported Royal Dutch Shell might feed its gas into other LNG projects in the area due to rising costs.

BusinessDay with agencies