However, some disappointing building approvals and trade balance figures weighed upon the bourse.
At the 4.15pm (AEDT) close, the benchmark S&P/ASX200 index was up 22.1 points, or 0.7 per cent, at 3188.5, while the broader All Ordinaries index gained 22.9 points, or 0.73 per cent, to 3148.8.
Chinese Premier Wen Jiabao said that Government spending would rise 25 per cent this year in a bid to revitalise the slowing economy and achieve 8 per cent growth.
City Index Australia markets strategist Alex Douglas said the materials sector was the main driver of the market, with mining and energy stocks stronger.
"BHP (Billiton) has been firmer on the back of expectations that China will give things a boost,'' Mr Douglas said.
He said trading had been choppy as investors awaited details of China's economic stimulus package.
IG Markets institutional dealer Chris Weston said the Australian market opened strongly but fell away after disappointing figures on building approvals and a worse than expected trade balance.
Resources were the shining light on the market.
BHP Billiton rose 4.43 per cent to $28.31, and Rio Tinto gained 5.24 per cent to $45.75.
Energy stocks were also stronger.
Oil and gas producer Woodside Petroleum climbed 49 cents to $34.20, and Santos improved 20 cents to $14.68.
On Wall Street overnight, the Dow Jones Industrial Average index rose 149.82 points, or 2.23 per cent as an expected economic stimulus plan from China and new US efforts to ease home foreclosures helped mute the impact of weak economic data.
On the Sydney Futures Exchange, the March share price index futures contract was 16 points higher at 3178 on a volume of 28,642 contracts.
More to come.
Resources boost shares at noon
Market higher at noon
Nashville-area home sales hit 15-year low
