The benchmark S&P/ASX200 index rose 47.8 points, or 1.24 per cent, to 3903.8 points, while the broader All Ordinaries index lifted 48 points, or 1.25 per cent, to 3899.5 points.
On the Sydney Futures Exchange, the September share price index futures contract was 49 points higher at 3879 on a volume of 21,394 contracts.
IG Markets research analyst Ben Potter said investors appeared to be switching from the mining sector to the financial sector.
"Investors feel the materials space is overstretched following the recent rally, and see better value among the financials,'' he said.
The miners were down despite positive movement in prices for base metals in London.
Mr Potter said pressure on Rio Tinto's listed shares in the United Kingdom ahead of a rights issue was a factor.
Among the major banks, Commonwealth Bank shares were up $1.11 at $38.66, National Australia Bank added 80 cents to $22.30, Westpac strengthened 49 cents to $20.00, and ANZ gained 35 cents at $16.40.
Investment bank Macquarie Group jumped $1.83 to $37.77.
In the resources sector, global miner BHP Billiton shed 34 cents at $34.18, and Rio Tinto fell 79 cents to $51.00.
Oil and gas producer Woodside Petroleum jumped 85 cents to $42.88, and Santos advanced 27 cents to $14.43.
Oil refiner Caltex Australia put on 48 cents at $13.19 after it said it expected profit for the first half of the 2009 financial year to rise by as much as 50 per cent.
In the gold sector, Newmont firmed three cents to $5.27, Newcrest improved three cents to $30.03, and Lihir picked up five cents at $2.96.
The price of gold in Sydney was $US943.50 per fine ounce, up $US8.35 on yesterday's close of $US935.15.
Telco Telstra strengthened eight cents to $3.28, and Optus-owner Singapore Telecommunications was steady at $2.55.
Among media stocks, Consolidated Media was four cents richer at $2.31, and Fairfax lifted 1.5 cents to $1.23.
News Corp was up seven cents at $13.20 and its non-voting scrip nudged up one cent to $11.46.
Retailer Woolworths rose 45 cents to $25.96, and Wesfarmers, which owns Coles, was down 37 cents at $21.83.
Among other stocks, national carrier Qantas Airways was up 3.5 cents at $2.01 after it cancelled or deferred an order for 30 Boeing 787 Dreamliners in a move that will save it billions of dollars amid a slump in demand for air travel.
Building products supplier Boral stepped forward 16 cents to $4.10 as it confirmed its managing director would retire at the end of 2009.
Listed health insurer NIB Holdings firmed one cent to 88.5 cents as it warned its shareholders they may be targeted for unsolicited, below-market offers for their stock.
The top-traded stock by volume was Environmental Clean Technologies, with 296.88 million shares worth $25.3 million changing hands. Environmental Clean was 2.4 cents higher at 8.2 cents.
National turnover was 2.28 billion shares worth $6.51 billion, with 656 stocks up, 438 down, and 360 unchanged.
On Wall Street overnight, the Dow Jones Industrial Average index gained 172.54 points, or 2.08 per cent, to 8472.40.
