At 10.15am (AEST), the benchmark S&P/ASX200 was up 63.2 points, or 1.72 per cent, at 3,734.8, while the broader All Ordinaries gained 61.1 points, or 1.69 per cent, to 3678.6.
On the Sydney Futures Exchange, the June share price index contract was trading 16 points higher at 3,738 on volume of 4,482 contracts.
Among the banks, Westpac increased 52 cents to $20.52, National Australia Bank rose 55 cents to $22.40, ANZ gained 55 cents to $17.17 and Commonwealth Bank added $1.19 cents, or 3.34 per cent, to $36.75.
The big miners were stronger. BHP Billiton was up 45 cents at $32.90 and rival Rio Tinto rose $1.85 to $55.65.
In the US overnight, stocks ended mostly higher ahead of a flurry of earnings reports that could determine whether the economy is really getting better, as investors have been hoping over the past month.
Broader stock indicators advanced. The S&P500 index rose 2.17, or 0.25 per cent, to 858.73, and the Nasdaq composite index rose 0.77, or 0.05 per cent, to 1,653.31.
The Dow Jones Industrial Average fell 25.57, or 0.32 per cent, to 8057.81.
"When you got the banks and the resources going up you got a real magnet for the market," Austock Securities senior client adviser and strategist Michael Heffernan said.
"Telstra aren't going too well and there aren't any surprises from Qantas with the downgrade."
Qantas has flagged further jobs cuts, capacity reduction and downgraded its annual profit forecast due to rapidly deteriorating trading conditions.
Its shares were 15 cents, or 7.65 per cent, lower at $1.81.
Telstra has set up a special committee to negotiate with the Federal Government about its national broadband network plan. Its stock was one cent lower at $3.25.
The energy sector was stronger, with Woodside gaining 53 cents to $38.69, Santos adding six cents to $16.60 and Oil Search putting on 10 cents to $5.32.
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