At 10.15am (AEST), the benchmark S&P/ASX200 was 64.9 points higher, or 1.35 per cent to 4,879.2, while the broader All Ordinaries picked up 61.3 points, or 1.26 per cent to 4,932.8.
The September share price index futures contract was up 37 points to 4872, on volume of 9352 contracts.
In the finance sector, Commonwealth Bank lifted 64 cents, or 1.43 per cent to $42.64, while second-ranked Westpac put on 26 cents, or 1.16 per cent to $23.52.
National Australia Bank lifted 26 cents to $24.14, while ANZ climbed seven cents, or 0.53 per cent to $16.92.
St George Bank rose 26 cents, or 0.85 per cent to $30.86, while bank and insurer Suncorp-Metway managed was seven cents higher, or 0.7 per cent, to $10.07.
Macquarie Group recovered $1.41, or 3.33 per cent to $43.42, while second-tier Babcock & Brown lost a further 6.5 cents, or three per cent to $1.935.
Cash metals were up slightly on the London Metals Exchange, while NYMEX light sweet crude slid yet again, this time by $US1.71, or 1.67 per cent to $US100.87 a barrel.
BHP Billiton jumped 85 cents, or 2.47 per cent to $35.32, while takeover target Rio Tinto rose $2.14, or 2.11 per cent to $103.69.
In the energy sector, Woodside put on 67 cents, or 1.27 per cent to $52.75, Santos gained 19 cents, or 1.04 per cent to $18.39, while mid-tier New Guinea producer Oil Search lost eleven cents, or 1.94 per cent to $5.57.
The Dow Jones Industrial Average of 30 heavyweights started off lower, but climbed steadily throughout the session to finish up 164.79 points, or 1.46 per cent to 11,433.71, while the broader Standard & Poor's 500 added 17.01 points, or 1.38 per cent, to 1249.05.
The NASDAQ, which sports more recently listed giants, rose 29.52 points, or 1.32 per cent, to $2258.22.
Whites Funds Management portfolio manager Angus Gluskie said the local market was up on the possibility that troubled US merchant bank Lehman Brothers might find a buyer or an investor for its business.
"Late breaking news is the Fed is brokering a buyout, and there are a number of institutions looking at it," Mr Gluskie said.
"The word that goes with it is that they want to be able to announce this during the weekend, so that by the open of business in Asia next week they've got a done deal.
"Bank of America is rumoured to be in talks. It took over Countrywide a while back and is viewed as having sufficient capital."
In other local news, Ausdrill attributed a "large number of shares traded" in the mining services company to hedge funds selling the stock.
Ausdrill said its trading volumes picked up after Nick Bowen, the chief executive of would-be predator Macmahon, was reported as saying that his $517 million all-scrip buyout attempt was unlikely to succeed.
At 10.56am (AEST), Ausdrill was up nine cents, or 4.5 per cent to $2.09, while Macmahon was steady at $1.82.
Fairfax newspapers reported that Packer-controlled Publishing and Broadcasting Limited pays rent of $1 a year for its Crown casino site in Melbourne.
At 10.45am (AEST), Crown had lifted 17 cents, or 1.93 per cent to $8.98, while poker machine developer Aristocrat Leisure was up 18 cents, or 2.64 per cent to $6.99 after announcing the appointment of a new boss of its North American operations.
Real Estate Outlook: Positive Trends In Housing Studies
