At 4.15pm (AEDT), the benchmark S&P/ASX200 index had firmed 41.4 points or 1.12 per cent to 3735.7, and the broader All Ordinaries index had risen 36.8 points or 1.01 per cent to 3680.4.
"Banks were weighing on the market,'' Ord Minnett private client adviser Jon Hancock said.
"The only upside were the resources, particularly being propped up by BHP Billiton more so than Rio.''
BHP Billiton added 95 cents to $31.70, while rival Rio Tinto eased 7 cents to $43.93.
Financials were mixed.
Commonwealth Bank firmed 24 cents $28.80 and NAB was up 14 cents or 0.67 per cent to $21.00.
ANZ Banking Group backtracked by 2 cents to $15.20 and Westpac declined 7 cents to $16.50.
By 4.24pm, diversified financials mostly were stronger with the notable exception of Macquarie Bank.
Australia's largest investment bank finished 3.45 per cent lower at $31.38 after Thursday's market update which saw the bank declare the December quarter had been "exceptionally challenging''.
Gold stocks were the bourse's clear bright spot, with Lihir Gold surging 11.79 per cent to $2.75.
Newcrest Mining jumped $2.30 to $30.65 and Newmont Mining up 7.26 per cent to $5.32.
At 4.25pm, the spot price of gold in Sydney was $US855.55 per fine ounce, up $US9.00 on Thursday's close of $US846.55.
Retailers were also stronger.
Woolworths gained 21 cents to $26.23, Wesfarmers - owner of Coles supermarket chain - added 1.45 per cent to $18.95, and upmarket department store David Jones grew 1 cent to $3.06.
Harvey Norman was the one weak spot, shedding 10 cents to $2.44.
Media stocks were mostly higher.
Fairfax Media was the only stock in the sector to lose ground, marginally lower by 0.5 cent to $1.695.
Rival News Corporation (the parent company of the publisher of news.com.au) put on 21 cents to $13.82, while Consolidated Media jumped 4.26 per cent to $2.08.
Trading volumes are starting to increase although the level of active participants in the market remains low with many retail clients still on holidays, Mr Hancock said.
"Largely there's a lack of direction in the market. There's a perception that we'll go for a little bit of a run on the back of the Obama presidential inauguration on January 20.
"But largely, the uncertainty in the market still exists,'' he said.
On the Sydney Futures Exchange, the March share price index contract was 21 points higher at 3713 on a volume of 13,763 contracts.
Share market lower on thin trade
With no such thing as a safe bet, investors turn to the untraditional
Investors holding Tennessee stocks take a beating
