(Adds analysis, quotes, stocks on the move)
SYDNEY, Feb 25 (Reuters) - Australian shares rose to 5-1/2 year highs on Tuesday morning, supported by gains in the banking sector and a jump in QBE Insurance shares on optimism profit margins will improve in 2014 despite the insurer suffering an annual loss.
A largely upbeat earnings season has given the market fresh impetus in recent weeks, with many of the blue-chip banking and mining companies putting up strong performances.
Commonwealth Bank of Australia, the top bank by market capitalisation, rose 0.4 percent and National Australia Bank gained 0.8 percent.
QBE Insurance Ltd posted a loss of $254 million, but its shares climbed 3.8 percent to 6-week highs of A$12.09 as the company said it would refocus its growth initiatives and forecast premiums to grow 2.5 percent in 2014.
The S&P/ASX 200 index rose 0.2 percent, or 10 points, to 5,449.8 by 0113 GMT, after earlier touching a high of 5,461.7 -- its highest point since June 2008. The benchmark has risen for eight consecutive sessions, its longest streak since January 2013.
The market has rebounded from a loss of 3 percent in January to add 4.9 percent so far this month on the back of a healthy earnings season.
"We're up 8 percent over the past couple of weeks. There was a lot of good moves on the earnings, I think the earnings weren't as bad as people feared," said Shawn Hickman, managing director of Market Matters in Sydney.
Putting the shackles on the market in early trade, resources stocks lost ground as copper fell to its lowest in more than two weeks. Index heavyweights BHP Billiton Ltd and Rio Tinto Ltd lost 0.6 percent and 0.7 percent respectively.
IOOF Holdings Ltd tumbled 5.6 percent after the financial services provider reported its first half earnings, up 11 percent to A$368.3 million.
"The actuals were just okay, they were probably softer than expected," said Evan Lucas, market strategist at IG in Melbourne. "The fact that guidance is weaker with no actual physical numbers given, it's why you're seeing IOOF off."
Ramsay Health Care Ltd soared 6.7 percent to all time highs of A$47.55 after the company said its first half revenue from services increased by 13.9 percent to A$2.36 billion.
Papua New Guinea's Oil Search Ltd was put on a two-day trading halt as it is working on a significant acquisition, the oil and gas producer said.
U.S. stocks jumped overnight, with the S&P 500 climbing above key resistance to a record high, as optimism over merger activity helped Wall Street erase this year's early weakness.
New Zealand's benchmark NZX 50 index edged 0.1 percent higher to 4,976.2.
Reporting by Thuy Ong; Editing by Shri Navaratnam