MELBOURNE - The share market ended the day stronger after Australian investors shrugged off news of a much-expected interest rate hike.

The benchmark S&P/ASX200 index closed up 17.7 points, or 0.38 per cent, to 4,719 points, while the broader All Ordinaries index gained 17.6 points, or 0.37 per cent, to 4,733.1 points.

On the Sydney Futures Exchange at 1615 AEDT, the December share price index contract was 30 points higher at 4,725 on 26,770 contracts.

The market gains came despite a decision by the Reserve Bank of Australia to lift the cash rate to 3.75 per cent, from 3.5 per cent.

"The market has taken this well-telegraphed interest rate increase very much in its stride I think," said Austock Securities senior client adviser Michael Heffernan.

"Broadly speaking, the market has performed in a wishy-washy way, but it has got its nose in front," he said.

He said the banks held up well, considering the strong gains on the financial sector on Monday.

Shares in Commonwealth Bank closed up $1.05 to $53.85, Westpac rose four cents to $24.18 and Macquarie Group was up 50 cents to $48.50.

National Australia Bank fell seven cents to $28.55 and ANZ lost 18 cents to finish at $21.97.

The big miners ended mixed, with BHP Billiton up four cents at $41.34 and rival Rio Tinto down 26 cents, at $71.40.

On Tuesday Rio Tinto said it had completed the sale of Alcan Composites to Swiss-based machinery maker Schweiter Technologies for US$349 million (A$381 million).

Gold miners were mixed, with Lihir losing two cents to $3.58, Newmont steady at $5.83 and Newcrest up 61 cents at $37.40.

The spot price of gold in Sydney 1621 AEDT was US$1,177.70 per fine ounce, up US$6.30 on Monday's closing price of US$1,171.40 per ounce.

Shares in gold and base metals explorer Indophil Resources jumped 11.5 cents, or 10.6 per cent, to $1.20 after China's largest gold producer Zijin Mining Group Co Ltd made a $545 million takeover bid.

Energy stocks were mostly stronger, with Woodside Petroleum gaining 55 cents to $49.30 and Oil Search gaining 17 cents to $5.87.

Workers at Woodside's $12 billion Pluto liquefied natural gas project in WA downed tools on Tuesday after objecting to new `motel-style' accommodation arrangements.

Santos rose 22 cents to $14.94 and Origin Energy fell six cents to $15.55.

Beef producer Australian Agricultural Company Ltd fell 4.5 cents to $1.355 despite news it had successfully refinanced debt that was due in 2010 and 2011.