At 10.17am (AEDT), the benchmark S&P/ASX200 index was up 70.5 points, or 1.74 per cent, at 4121.8 while the broader All Ordinaries added 71.3 points, or 1.78 per cent, to 4077.9.
On the Sydney Futures Exchange, the December share price index futures contract was 31 points higher at 4155 on a volume of 10,552 contracts.
The big miners led gains. BHP Billiton, Australia's biggest company, gained $1.27, or more than 4 per cent, to $29.20.
BHP's takeover target Rio Tinto rose $4.33, or nearly 6 per cent, to $76.60. That was despite Rio's announcement that it will scale back production of iron ore at its operations in Western Australia's Pilbara region by 10 per cent due to weakening demand from China.
The gold miners also gained as the precious metal's price increased in Sydney. Spot gold in Sydney was at $US743.45 an ounce, up $US8.40 on Friday's local close of $US735.05.
Newcrest Mining increased 97 cents, or 4.47 per cent, to $22.66, Lihir Gold added two cents to $2.09 and Sino Gold gained 17 cents, or 5.36 per cent, to $3.34.
In the US on Friday, the Dow Jones Industrial Average rose 248.02, or 2.85 per cent, to 8943.81.
The broader S&P 500 index added 26.11, or 2.89 per cent, to 930.99, and the Nasdaq rose 38.70, or 2.41 per cent, to 1,647.40.
Cameron Securities client adviser Adrian Leppinus said the resource stocks such as BHP had rebounded, pulling up the rest of the market.
He said a real "flight to quality" was helping companies such as QBE Insurance and Woodside Petroleum, as well as BHP.
QBE, Australia's biggest insurer, gained 65 cents, or 2.33 per cent, to $28.55 and Woodside, the country's biggest oil and gas producer, rose $1.31, or 3.29 per cent, to $41.11.
Mr Leppinus said the banks had fallen after NAB said it was raising $2 billion through a new share sale.
"The big action we saw this morning was NAB, and the banks have been sold off on that," he said.
NAB's shares are in a trading halt pending the outcome of the $2.25 billion share placements announced before the market opened this morning.
Commonwealth Bank slumped $1.45, or $3.62 per cent, to $38.62. ANZ declined 49 cents, or 3.01 per cent, to $15.80 and Westpac dropped 80 cents, or 3.81 per cent, to $20.20.
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