Financials mostly reversed early losses. National Australia Bank (>> National Australia Bank Ltd.) and Australia and New Zealand Banking Group (>> Australia and New Zealand Banking Group) gained 1.3 percent and 1 percent respectively, but the Commonwealth Bank of Australia was down 0.8 percent.

"A lot of investors are shorting them at the moment, particularly the internationals," said John Milroy, a private wealth advisor at Macquarie Bank, about major bank stocks.

"There's been a bit of re-rating across the sector, CBA has probably done its best and you're seeing money switch out of CBA."

The S&P/ASX 200 index <.AXJO> was down 2.4 points to 5,245.6 by 03.02 a.m. British Time, recovering from the morning's lows but about 20 points below a 5-year high hit on Monday.

In the minutes of its September 3 policy meeting, which were released on Tuesday, the Reserve Bank of Australia kept the door open to further interest rate cuts but again signalled no urgent need to act.

"Investors are looking for signs of another possible rate cut by the end of 2013," said Tim Radford, global analyst at Rivkin Securities in a note to clients.

"A dovish tone in the meeting minutes should be positive for equities and provide some buying support."

Further supporting sentiment was gains on Wall Street.

However, miners were lower after Chinese steel futures fell for a fifth straight session on Monday, hitting their lowest in more than six weeks on weaker demand from end-users. Top iron-ore producers BHP Billiton Ltd (>> BHP Billiton Limited) and Rio Tinto Ltd (>> Rio Tinto Limited) fell 0.6 percent and 0.7 percent respectively.

So far this year, BHP and Rio Tinto shares have fallen 2.9 percent and 4.8 percent respectively on lower commodity prices and fears of a slowdown in China, their top export market. In contrast, the main index is up 12.6 percent in 2013.

Defensives and insurers also lost ground. Blood products maker CSL Ltd (>> CSL Limited) dropped 0.7 percent and food retailer Wesfarmers Ltd (>> Wesfarmers Ltd) shed 0.4 percent.

New Zealand's benchmark NZX 50 index <.NZ50> edged 0.1 percent higher to 4,697.3 points.

(Reporting by Thuy Ong; Editing by John Mair)