(Adds analysis, quotes, stocks on the move)
SYDNEY, July 2 (Reuters) - Australian shares climbed 1.9 percent on Tuesday as Wall Street rose overnight, recovering losses from the previous session as investors await cues from the Reserve Bank of Australia's policy meeting later in the day.
Financials rebounded from the previous session. Top lender Commonwealth Bank of Australia rallied 1.6 percent while Australia and New Zealand Banking Group climbed 1.4 percent. Westpac Banking Corp added 1.1 percent.
The S&P/ASX 200 index rose 87.7 points to 4,798 by 0128 GMT. The benchmark fell 1.9 percent on Monday, its biggest one-day drop since June 20.
"Yesterday it was all about selling overseas, overseas investors taking a more negative view on the Australian dollar," said Martin Lakos, division director at Macquarie Bank.
"Stocks are being marked back up from yesterday's losses."
The Australian dollar touched a near three-year low against a broadly firmer greenback on Monday.
Global miners edged higher after copper rose on Monday in a rebound from last week. BHP Billiton Ltd and Rio Tinto Ltd jumped 2.6 percent and 2.2 percent respectively.
The Reserve Bank of Australia meets later on Tuesday for its monthly policy meeting. Markets are pricing in a 16 percent likelihood of a rate cut, while a Reuters poll showed 21 out of 23 economists see the cash rate unchanged at a record low of 2.75 percent.
Defensives also helped underpin the market. Consumer retail staples Wesfarmers Ltd and Woolworths Ltd added 2.4 percent and 1.7 percent respectively. Insurance provider QBE Insurance Group Ltd soared 3.1 percent while biotechnology firm CSL Ltd jumped 1.4 percent.
U.S. stocks ended higher on Monday, supported by signs of strength in the manufacturing and construction sectors although the major U.S. stock indices pulled back from session highs late in the day as investors sold some shares to book profits.
New Zealand's benchmark NZX 50 index rose 0.8 percent or 36.4 points to 4,454.5.
* Brambles Ltd climbed 2.4 percent to A$9.30. The Australian pallet supplier has revived a plan to exit its $2 billion data management business, saying it will spin off the unit and list it on the Australian Securities Exchange (ASX).
* CSR Ltd jumped 3.3 percent to A$2.20 after the company announced a dividend reinvestment plan priced at $2.1078 per share for its final dividend.
* Queensland Mining Corporation Ltd lost 5 percent to A$0.019 after the company said it was undergoing management changes and an office relocation. Its CEO and CFO have resigned.
* Deep Yellow Ltd surged 33.3 percent to A$0.044, its highest point since early May, after the uranium exploration company announced the appointment of Tim Netscher as chairman.
0127 GMT Reporting by Thuy Ong; Editing by Eric Meijer