* RBA holds key policy rate
* ANZ rises on broker upgrades
* NZ falls for second straight session (Updates to close)
By Soumyajit Saha
Feb 4 (Reuters) - Australian shares on Tuesday recouped some of the sharp losses suffered in the previous session, driven by financial and healthcare stocks, although worries over the fast-spreading coronavirus outbreak capped gains.
The S&P/ASX 200 index .AXJO rose 0.4% to 6,948.7 points at the close of trade, having lost 1.3% on Monday.
The Reserve Bank of Australia held its cash rate at record lows at its first meeting of the year on Tuesday and sounded doggedly optimistic as it maintained forecasts for economic growth for this year and next at 2.75% and 3%, respectively. central bank's policy decision helped drive gains in the interest rate sensitive financial sector .AXFJ , which rose 0.4%.
Australia and New Zealand Banking Group Ltd ANZ.AX jumped 1.5% and was among the top boosts to the benchmark. The bank's stock was upgraded by Credit Suisse (SIX:CSGN) and Morgan Stanley (NYSE:MS) on improving outlook. country's No.2 lender Westpac Banking Corp WBC.AX ended flat after falling as much as 1.5% during the session. The bank was hit with a class-action lawsuit in the United States on Monday over issues with its financial crime monitoring. stocks .AXHJ rose 0.6%, with sector heavyweight CSL Ltd CSL.AX dominating the gains after its unit got the approval for an influenza vaccine from the U.S. Food and Drug Administration. the coronavirus epidemic in China, Australia's biggest trade partner, kept risk sentiment in check. The death count from the virus outbreak rose to 427 as of Monday. and analysts said the economic impact of the epidemic coupled with the bushfires in Australia are likely to lead to an interest rate cut by the RBA in April.
"The uncertainty around the coronavirus poses substantial risks to economic forecasts but certainly the impact of the virus over the course of the first quarter both globally and domestically has to be quite damaging," Westpac said in a note to clients, adding that it expects a rate cut in April.
Meanwhile, energy stocks .AXEJ dropped 1.1% on lower oil prices.
Across the Tasman sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.34% to finish the session at 11,511.49 points, extending losses into a second straight session.
Index heavyweights Meridian Energy MEL.NZ and Auckland International Airport AIA.NZ ended the day 3.2% and 2.4% lower, respectively.