The ASX 200 rose 4.43 per cent to 3645 and the broader All Ordinaries was up 3.98 per cent to 3564 at 3:41pm.
Oil stocks pushed markets higher as crude oil rose for the first time in seven days.
Shares in oil producers jumped 7 per cent after crude oil rose to $US42 a barrel.
Santos was up 11 per cent to $13.49 per on news that China National Petroleum Corp was considering teaming up with a foreign oil company to bid for Santos.
Woodside Petroleum was higher by 6.2 per cent at $32.35.
Miners and steelmakers were not as strong, up by 2 per cent in afternoon trade.
Rio Tinto fell 1.3 per cent to $31.6 on reports in Britain that miner will postpone billions in spending and cut thousands of jobs.
BHP Billiton, which recently backed out of its takeover bid for Rio Tinto, rose 1.8 per cent to $26.63.
Retailers got a boost as the Australian Federal Government's bonus payments to families and pensioners began flowing into pockets today.
David Jones rose 2.9 per cent to $2.86 and Harvey Norman was up 2.6 per cent at $2.41.
Asian markets opened higher after Wall Street gained 3 per cent on Friday, with Japan's Nikkei up 1.2 per cent.
Dollar General sales are up 12.4%
OPEC to try again to lift oil prices
Share market opens higher
Share market opens 2pc higher
