(Adds analysis, quotes, stocks on the move)
SYDNEY, March 4 Australian shares inched up 0.3 percent on Tuesday, with upbeat building approvals data and gains in energy stocks helping to steer a cautious morning session amid the tense standoff between Ukraine and Russia.
Oil and gas producers Santos Ltd rose 0.6 percent while AWE Ltd climbed 2.5 percent. Crude prices jumped more than $2 a barrel overnight to the highest level since September as the Russian military tightened its grip on the Crimean region of Ukraine.
A handful of miners also supported the market, with BHP Billiton Ltd and Rio Tinto Ltd adding 0.3 percent and 0.7 percent respectively.
The S&P/ASX 200 index rose 13.5 points to 5,397.8 by 0121 GMT. The local benchmark was outperforming the region, with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.1 percent.
"We saw a sell-off in the market yesterday and given the dividends coming out of the market, the strength today is surprising," said Simon Twiss, partner and dealer at Arnhem Investment Management, noting that the energy sector is propping up the market.
The benchmark hit a 5-1/2 year high of 5,461.7 on February 25 and has since slipped some 65 points as tensions between Ukraine and Russia rattled investors.
Earlier in the day, data from the Australian Bureau of Statistics showed a jump of 6.8 percent in building approvals for January, comfortably topping expectations of a 2 percent rise.
The upbeat data spurred construction stocks, including Boral Ltd and property developer Stockland Corporation , which rose 1.8 percent and 0.8 percent, respectively.
Markets are also watching out for the outcome of the Reserve Bank of Australia's March policy meeting later in the day. The focus will be on the policy statement as the central bank is considered almost certain to hold rates at a record low of 2.5 percent.
AGL Energy Ltd dropped 2.9 percent after Australia's competition regulator blocked its A$1.5 billion plan to buy state-owned power company Macquarie Generation.
Envestra Ltd tumbled 8.3 percent to near 3-month lows of A$1.16 on news the Australian natural gas distribution company will be acquired by APA group for an assessed share value in the range of A$1.11-A$1.32 per share.
Stocks in Qantas Airways were trading flat at A$1.15.
On Monday, the Australian government agreed to loosen restrictions on foreign ownership of the national carrier. Opposition Labor politicians said the plan would not pass parliament, even with a new Senate in July.
New Zealand's benchmark NZX 50 index rose 0.5 percent to 5,034.5, extending its record highs reached in the previous session on the back of an improving economy. The NZX 50 index has been edging higher for the better part of a year, continuing on a broadly positive trend.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)