(Adds details, comments)
SYDNEY, April 30 (Reuters) - Australian shares climbed 1.3 percent on Tuesday to close at their highest level in almost five years, led by sharp gains in the financial sector as Australia and New Zealand Banking Group jumped to a record high after a strong earnings report.
ANZ, Australia's fourth-largest bank, surged 5.8 percent to an all-time high of A$31.84, after it reported a 10 percent rise in first-half cash earnings to A$3.18 billion ($3.29 billion) and announced a forecast-beating dividend of A$0.73, up 11 percent from the previous year.
The upbeat earnings prompted broad gains in the financial sector, with the Commonwealth Bank of Australia up 2.6 percent and National Australia Bank rising 2.8 percent.
"The bid put in to other financial names has been interesting, clearly that's a function of ANZ lifting its dividend guidance," said Chris Weston, chief market strategist at IG Markets.
The S&P/ASX 200 index soared 65.4 points to finish at 5,191.2, it's highest closing level since June 2008. The market added 0.6 percent on Monday.
The mood was also buoyed by advances in U.S. stocks overnight, with the S&P 500 index ending at an all-time as growth orientated stocks, including energy and technology, lead the way to the index's sixth rise in the past seven sessions.
Michael McCarthy, chief market strategist at CMC Markets, believes that many traders will take the Australian market's close above the previous high of 5,163 points as a signal that the market will continue to advance in the short term.
A run of weak data from the United States, China and Germany over the past few weeks have weighed on the Australian market, but underlying demand has been sustained by a resilient domestic economy and a strong earnings season. The benchmark index has gained some 11.7 percent so far this year and is up 4.5 percent for April alone.
Top telecommunications provider Telstra Ltd climbed 1 percent to A$4.98, its highest point since August 2005.
"One is the search for yield and the other is the breakout in the market, said McCarthy, referring to the continued interest in Telstra stock.
Telstra currently yields at 5.7 percent.
Global miners also finished firmer. BHP Billiton Ltd rose 0.5 percent while Rio Tinto Ltd tacked on 0.8 percent. Rio Tinto plans to almost halve the size of its London head office, according to an internal memo seen by Reuters, cutting more than 200 jobs as it tries to slash more than $5 billion in costs by the end of next year.
Whitehaven Coal Ltd fell 0.5 percent to A$1.95 after the company reported its coal production for the March quarter and said the value of thermal coal in the first half has been reduced by general weakness in the market price. Whitehaven shares have crashed 44.3 percent since the beginning of 2013.
Woodside Petroleum Ltd lost 2.6 percent to A$37.56 after the oil miner entered into an agreement with Shell on its Browse LNG development.
New Zealand's benchmark NZX 50 index added 0.7 percent or 33.4 points to a record closing high of 4,614.3. (Reporting by Thuy Ong; Editing by Shri Navaratnam)