* S&P/ASX200 up 0.3 percent in subdued trade
* Banks underpin moves higher, but gains capped by miners on iron ore drop (Adds analysis, quotes, stocks on the move)
By Thuy Ong
SYDNEY, April 22 (Reuters) - Australian shares rose 0.5 percent on Tuesday morning, steered by modest gains on Wall Street and interest for banking stocks, though volumes were light in an abbreviated trading week as the Easter holiday leads to Anzac day on Friday.
Blue-chip banks Australia and New Zealand Banking Group and Westpac Banking Corp added 0.8 percent and 0.7 percent. Mid-tier Bank of Queensland Ltd advanced 0.8 percent.
Miners were hit after Chinese steel rebar futures dropped for a fifth day on Monday on concerns that seasonal demand from the world's top consumer of the alloy would not be strong enough to soak up hefty supply. Index heavyweight Rio Tinto Ltd lost 0.8 percent, while OZ Minerals Ltd dropped 0.9 percent. BHP Billiton Ltd slipped 0.1 percent.
The S&P/ASX 200 index advanced for its fourth consecutive session of gains, up 27.1 points at 5,481.3 by 0152 GMT, in subdued trade. The benchmark rose 0.6 percent last Thursday. Markets were closed on Friday and Monday for Easter.
The benchmark touched a near 6-year high of 5,503.5 on April 10, helped by upbeat economic data including a March jobs report which handily beat expectations for a second month.
"Not surprisingly fears of a large stock market correction have subsided as stocks drift back to all-time highs," said Tim Radford, global investment manager at Rivkin Securities in a note to clients, adding that investors will focus on U.S. company earnings results in the absence of local macro events.
U.S. stocks advanced modestly on Monday in subdued trading as investors showed hesitation in the wake of a strong rally last week and before a slew of key earnings releases this week.
Elsewhere, defensive were higher with consumer retail staple Wesfarmers Ltd and blood-products maker CSL Ltd each adding 0.5 percent.
Some of the smaller caps were also enjoying a strong morning. Metals X Ltd soared 6.3 percent to two-week highs of A$0.20 after reaching an agreement for a royalty restructure at Higginsville Gold Operations with Morgan Stanley Commodities.
Astron Ltd rocketed nearly 60 percent to A$0.35, its highest since May 2012, after entering into a deal with the China Machinery Engineering Corp for supply and installation of equipment for the Donald Mineral Sands Project.
Meanwhile, Australia's Crown Resorts Ltd is set to bid for a $2 billion casino complex in Las Vegas, according to media reports, underscoring the Melbourne-based casino operator's ambition to expand to more markets. Shares in Crown were down 0.5 percent.
New Zealand's benchmark NZX 50 index slipped 0.1 percent or 7.6 points to 5,095.8. (Reporting by Thuy Ong; Editing by Shri Navaratnam)