At 12.00pm (AEST), the benchmark S&P/ASX200 was up 83.3 points, or 2.27 per cent, at 3756.1, while the broader All Ordinaries gained 82.1 points, or 2.27 per cent, to 3699.6.
Stuart Smith, senior client adviser at Bell Potter Securities, said: "I think we've started off with great exuberance today and maybe we won't finish the week so strong.''
"There are diametric views - is this just a bear market rally? or dead cat bounce? or the real thing? The flaws in the argument are winning the debate today.''
Financial stocks were all higher at noon.
Mr Smith said Commonwealth Bank maintained its lead in the banking sector, adding 3.85 per cent to $36.97.
ANZ gained 3.67 per cent to $17.23, while NAB put on 3.57 per cent to $22.63 and Westpac was up 3.1 per cent at $20.62.
Mr Smith said local banks made gains after Goldman Sachs posted a better-than-expected first quarter earnings of $US1.81 billion and said it would raise $US5 billion to repay part of the $US10 billion it received from the US government's Troubled Asset Relief Program.
National carrier Qantas fell 7.65 per cent to $1.81 after announcing further jobs cuts, capacity reduction and downgrading its annual profit forecast due to rapidly deteriorating trading conditions.
"It doesn't surprise anybody that they are losing money,'' Mr Smith said.
On the Sydney Futures Exchange, the June share price index contract was trading 39 points higher at 3761 on volume of 11,901 contracts.
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