Australian stocks surge as Iran ceasefire lifts risk-on sentiment

April 8 (Reuters) - Australian shares jumped on Wednesday as investors cautiously waded into risk assets after a U.S.–Iran ceasefire eased fears of an escalation that had built ahead of U.S. President Donald Trump's deadline for Iran to end the Gulf oil blockade.

The S&P/ASX 200 index .AXJO was up 2.4% at 8,935.50, as of 1220 GMT, led by index heavyweights banks and miners. Earlier in the session, the index rose nearly 3% in its biggest intraday percentage gain in a year.

Markets had been on edge after Trump warned overnight that "a whole civilisation will die tonight" if Iran defied his ultimatum, while Tehran threatened retaliation against U.S. allies in the Gulf.

Sentiment improved after Trump agreed to a two-week ceasefire less than two hours before his deadline and said Iran's proposal offered a "workable basis" for talks.

In Sydney, financials .AXFJ were the biggest sectoral gainers, rising 3% to a more than one-month high. The "big four" banks gained between 2.8% and 4%.

Miners .AXMM rose 4.3%, helped by higher iron ore and copper prices. Rio Tinto RIO.AX and BHP BHP.AX climbed more than 3% each.

Energy stocks .AXEJ lost some of their risk premium, falling 7.1% as the ceasefire triggered a more than $12 fall in US crude futures. Woodside WDS.AX slumped 9.2%, while Santos STO.AX fell 6.3%. O/R

Gold stocks .AXGD mirrored gains in bullion prices and jumped 6.6%. GOL/

Among individual stocks, Droneshield DRO.AX was the biggest laggard, falling as much as 19.8% after it announced changes to its top leadership.

In New Zealand, the benchmark S&P/NZX 50 index .NZ50 rose 1.6% to 13,279.01, with market focus squarely on the Reserve Bank of New Zealand's cash rate decision, due in an hour.

A majority of economists in a Reuters poll expects a hold as the central bank weighs inflation risks against weak economic growth.

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