Investors took their lead from a decline in bond yields to drive the local sharemarket higher on light volume, with the big, yield-sensitive power companies leading the way.
The S&P/NZX50 index ended at 12,344.49, up 42.68 points or 0.35 per cent, building on Monday's 0.6 per cent gain, but off its high for the day.
Trade was light, with turnover coming in at 52m shares, worth $179.3 million.
Across the board there were 96 rises and 46 falls.
Key US 10-year Treasury yields had traded lower and looked to be stabilising after spiking sharply higher last month, while New Zealand Government 10 year bond yields sank to 1.74 per cent from 1.89 per cent on Friday.
The fall in bond yields was seen as a green light for investors to jump back into the so-called bond proxies - the power generator-retailers that offer relatively attractive dividend yields, particularly after many of them took a battering from ETF-related selling last month, Forsyth Barr broker David Price said.
"There have been signs of life on the inflation front and people started to get quite excited, so sharemarkets had a rough week last week," Price said. "But March has started with a couple of good days," Price said.
Light market volume exaggerated movements in some stocks, he said.
Volatile trading in F&P Healthcare continued as investors grappled with what the company would look like in a post-Covid-19 world, following on from last August's dramatic rise to a peak of $37.68.
The stock closed at $29.02, down 69 cents or 2.3 per cent on the day.
"It's had a massive day today," Price said.
"There is a 10 year- replacement cycle for (FPH) hardware," Price said.
"There was a lot of buying (of hardware) last year so it is not going to be bought again," he said.
"At the same time, hospitalisation rates in the United States and Europe have been plummeting, so people are just extrapolating that across," he said.
The high-yielding power generator's all gained ground in response to lower bond yields.
Meridian firmed 24c or 4.25 per cent, to $5.89, Genesis 13.5c or 3.8 per cent to $3.65, Mercury 7.5c or 1.2 per cent to $6.22 and Contact by 7c or 1 per cent to $6.93.
Trustpower - which has undertaken strategic review of its retail operations - rebounded from earlier weakness to finish 6c up at $8.45.
Alternative milk company a2 Milk recovered ground after its post-result sell-off, the stock firming 52c or 5.4 per cent to $10.02.
Plexure, a mobile engagement specialist, firmed 7c or 7.6 per cent to 99c.
Fishing company, Sanford under the gun last week over the court-ordered forfeiture of one of its deep-sea fishing boats and over the impact that Covid-19 is having on its business, recovered ground, finishing 30c or 6.8 per cent higher at $4.70.
Smartpay, Australia and New Zealand's largest independent full-service Eftpos provider, closed 5.5c or 6.4 per cent higher at 91.5c.
Retail chain Briscoe Group firmed 16c or 2.9 per cent to finish at $5.65.
On the other side of the ledger, Auckland International Airport fell 22c or 2.9 per cent to $7.36.
Mining support and construction company SMW, formerly Aorere Resources, lost 14c or 8.5 per cent to $1.50 after announcing a first-half loss of $2.4m.
SMW last year bought Australia's AIN and the company said the loss reflected several one-off costs associated with the integration and rebranding of the two business units.
Michael Hill International, which last month reported an 82 per cent drop in its first-half profit to $39m, recovered from early weakness to end flat at 75c.
Electronic fleet management company Eroad fell 13c or 3 per cent to $4.15.