Banks and miners are leading the ASX’s fightback from three-month lows this afternoon, amid low trading volumes with markets in the US and UK closed overnight and China closed today for holidays.

“We saw a continuation of yesterday’s sell-off this morning, but we also saw a shift in sentiment after the release of April’s building approval numbers, which beat expectations,” said Gary Huxtable, client adviser at wealth management firm Atlantic Pacific Securities.

“There’s definitely a lot of bargain-hunting today,” he said.

The financial index, which on Monday saw its biggest loss since December, is up 0.7 per cent, helped by monthly improvement in housing starts. The big four plus Macquarie are enjoying gains of around 1 per cent.

Miners have recovered from a rout on Monday after tensions over potential iron-ore tax on mining giants Rio Tinto and BHP by the Western Australia state government eased.

Rio Tinto and BHP shares are also both up about 1 per cent each, while iron-ore miner Fortescue has added 1.9 per cent.

Energy stocks are among the biggest drags despite a moderate recovery in oil prices, as investors seek more clarity on the direction of OPEC-led production curbs.

Telstra is down 0.9 per cent.