At 12.00pm (AEDT0, the benchmark S&P/ASX200 index was up 23.6 points, or 0.68 per cent, at 3519.1.
The broader All Ordinaries index had gained 20.5 points, or 0.6 per cent, to 3455.6.
The big banks were stronger at midday.
Commonwealth Bank of Australia was up 46 cents, or 1.75 per cent, at $26.77, NAB added 60 cents to $18.62, ANZ had advanced 12 cents to $13.33 and Westpac had jumped 19 cents, or 1.22 per cent, to $15.78.
"Local financials are recovering from heavy losses last week, a continuation of the same theme out of the US,'' CMC Markets senior dealer Dominic Vaughan said.
"We're following the expectations that some of this toxic debt will probably come off the US books or split the banking system to a degree, and we've followed suit.''
Mr Vaughan said BHP Billiton's surging share price explained much of the domestic market's gains.
"They are probably the preferred mining stock at the moment,'' he said.
The mining giant was up $1.30, or 4.36 per cent, at $31.15 while its debt-laden rival Rio Tinto had fallen 33 cents to $40.62.
Mr Vaughan said gold stocks were weighing on the market after the price of the precious metal fell overnight.
At 12.07pm AEDT, the spot price of gold in Sydney was $US883.45 per fine ounce, down $US10.25 on yesterday's local close of $US893.70.
Newcrest was down 6.24 per cent at $29.91, Newmont was 6.09 per cent weaker at $5.71 and Lihir Gold gave up 3.57 per cent to $2.97 at 12.08pm AEDT.
Among energy stocks, Woodside had shed 42 cents, or 1.22 per cent, to $34.11, Oil Search was down 5 cents, or 1.17 per cent, at $4.24 and Santos was steady at $14.09.
Making headlines, gaming giant Tabcorp Holdings says it is well placed to cope with tough economic conditions and volatile financial markets, after booking a lower first half net profit and announcing a $300 million capital raising.
The company remains in a trading halt entered into on Thursday and last traded at $6.79.
Property giant Lend Lease Corporation has warned further write downs of about $290 million after tax are likely on the value of its assets.
Its shares had put on 24 cents, or 3.8 per cent, to $6.55 at 12.11pm AEDT.
Kitchen products, hardware and heavy equipment distributor Alesco Corporation has posted a 59.8 per cent fall in first half profit and says the rest of fiscal 2009 will be challenging.
The company's shares were steady at $2.39 at 12.11pm AEDT.
On the Sydney Futures Exchange, the March share price index contract was up 17 points at 3485 on a volume of 11,561 contracts.
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