ASX 200 stages biggest rally since 2016

The ASX 200 has staged its biggest rally since November 2016, gaining 1.88 per cent with gains coming across the board.

Australian shares are set to climb as Wall Street bounces back from a Christmas Eve slump. (AAP)

Christmas has come late for the Australian share market, with a Santa rally lifting the S&P/ASX200 index to its biggest single-day gains in over two years.

The benchmark index closed up 103.4 points, or 1.88 per cent, to finish at 5597.2 at 1615 AEDT.

It was the biggest daily percentage jump since November 10, 2016, when the index gained 3.34 per cent.

The index is still down 2.7 per cent on the month, however.

The broader All Ordinaries was up by 102.5 points, or 1.84 per cent, to close at 5562.1.

The Aussie edged lower, buying 70.55 US cents, down from 70.68 on Wednesday.