The rise in Australian stocks follow strong gains on the US and British markets overnight.
At 12pm (AEDT), the benchmark S&P/ASX200 index was up 156.7 points, or 4.58 per cent, at 3581.8, while the broader All Ordinaries rose 151.8 points, or 4.48 per cent, to 3540.6.
On the Sydney Futures Exchange, the December share price index futures contract was up 139 points, or 4.02 per cent, at 3595 points on volume of 21,178 contracts.
ABN Amro Morgans private client adviser Bill Bishop said the market was boosted by gains in the resources and financial sector and a strong Wall St close.
"Leading the gains are the banks and heavyweight resources, as usual," Mr Bishop said.
"A bit of good news from America last night is obviously pushing this market.
"There's a surge of hope... But will it catch from here and go higher? That remains to be seen.
"But there's much more green on that screen than we're used to."
Resource giants BHP Billiton and its takeover target Rio Tinto both had big gains.
BHP was up $2.40, or 10.27 per cent at $25.78, while Rio gained $3.93, or 6.57 per cent, at $63.73.
Among the financials, Commonwealth Bank added $1.45, or 4.8 per cent at $31.67, National Australia Bank was up 78 cents, or 4.15 per cent, at $19.58, ANZ was up 97 cents, or 7.52 per cent at $13.87 and Westpac gained 20 cents, or 1.21 per cent, at $16.70.
Energy stocks also gained following a rise in oil prices overnight.
At 12.10pm (AEDT), Australia's biggest oil and gas producer, Woodside Petroleum, had gained $3.34, or 11.11 per cent, to $33.41, Santos was up $1.40, or 10.77 per cent, at $14.40, and Oil Search had added 20 cents, or 4.47 per cent, at $4.67.
At 12.14pm (AEDT), spot gold in Sydney was trading at $US809.35 an ounce, up $US17.75 on yesterday's local close of $US791.60.
Gold miners all were up, with Newcrest Mining gaining $1.31, or 5.64 per cent, to $24.91, Newmont Mining up 25 cents, or 5.58 per cent, at $4.73 and Lihir Gold rising five cents, or 2.35 per cent, at $2.18.
In news this Tuesday, Harvey Norman says its profit before tax for the first quarter of 2008/09 is likely to be 31.5 per cent lower than the previous corresponding period.
Harvey Norman shares were down 27 cents, or 11.07 per cent, at $2.17.
Fellow retailer David Jones plans to open three new department stores and refurbish three of its existing outlets over the next two to three years.
The company said the initiatives will begin to deliver financial benefits from about fiscal 2012.
Shares in David Jones added three cents, or 1.19 per cent, at $2.55.
Among other retailers, Woolworths shed three cents to $24.97, while Coles' owner Wesfarmers gained 52 cents, or 2.74 per cent, to $19.52.
In other company news, Qantas has lowered its annual profit forecast and will again cut capacity, as the global financial crisis constrains demand for air travel. Qantas now expects a pre-tax profit of around $500 million for fiscal 2009. At 12.24pm AEDT, Qantas shares were steady at $2.31.
Brambles, the world's largest pallet supplier, says comparable operating profit for the Brambles group is expected to be broadly in line with last financial year. Shares in Brambles were down 51 cents, or 7.07 per cent, at $6.70.
Telstra has given the clearest indication yet it will make a bid to build the national broadband network. Tenders for the multi-billion network close at midday tomorrow and the Telstra board is understood to be meeting hours before to make a final decision about lodging a bid.
At 12.25pm AEDT, shares in Telstra were up 13 cents, or 3.23 per cent, at $4.16, while Optus parent Singapore Telecommunications was up two cents at $2.57.
At 12.28pm AEDT, the most traded stock was Oz Minerals with 61.9 million units traded for a total of $36.71 million. Shares in the miner were up 2.5 cents, or 4.81 per cent, to 54.5 cents.
Market turnover was 636.911 million shares, valued at $2.315 billion, with 603 stocks up, 214 down and 249 unchanged.
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