BHP leads Australian shares higher as banks sell off

The top-200 surged more than 75 points in early trading, but handed back more than half of those gains by the close as momentum faded over the session.

Australia's largest company BHP did much of the heavy lifting, up more than three per cent as iron ore futures advanced on the tail of better-than-expected industrial production figures from China, despite June quarter GDP undershooting forecasts.

The Australian dollar is buying 69.87 US cents, up from 69.28 US cents on Tuesday at 5pm, as the greenback eased against major currencies after a drop in US inflation softened the interest rate outlook.