At the 1615 AEST close, the benchmark S&P/ASX200 index had gained 55.3 points, or 1.28 per cent, to 4,381.2 points, while the broad-market All Ordinaries index added 50.5 points, or 1.16 per cent, to 4,401.2 points.
On the Sydney Futures Exchange at 1617 AEST, the June share price index futures contract was 52 points higher at 4,390 points, on a volume of 35,920. RBS Morgans private client adviser Trent Muller said bargain-hunters had moved into the local bourse after recent falls.
Also, the futures market in the United States was up, so local investors may have been pre-empting a positive lead tonight from markets overseas.
Mr Muller said buying and selling was not aggressive and investors were waiting for greater news flow on which to base their next move.
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"Retail figures in the US market on Friday night is probably the next real catalyst for investors to watch put for," he said.
Mr Muller said investors were still concerned about sovereign debt issues of various countries in the euro zone.
"But there's probably a perception out there that global equity markets have probably factored beyond what the effects will potentially be," he said.
Among the major banks, ANZ rose 29 cents to $22.31, Commonwealth Bank ascended 67 cents to $50.75, National Australia Bank improved 48 cents to $24.10 and Westpac strengthened 41 cents to $22.59.
In the resources sector, global miner BHP Billiton picked up 48 cents to $37.02 and Rio Tinto was $1.20 richer at $66.75 as reports said the two mining giants plan to raise September quarter iron ore prices by up to 23 per cent.
Oil and gas producer Woodside Petroleum rose 33 cents to $43.10 and Santos climbed 41 cents to $12.88.
On Wall Street overnight, the Dow Jones Industrial Average index closed down 115.48 points, or 1.16 per cent, at 9,816.49 points.
