The benchmark S&P/ASX200 index closed up 25.7 points, or 0.63 per cent, at 4089.8 points, the highest close since November 10.
The broader All Ordinaries index gained 24.7 points, or 0.61 per cent, to 4097.3 points, its highest level since November 6.
On the Sydney Futures Exchange at 16:15 AEST, the September share price index contract was 28 points higher at 4063 on 22,315 contracts.
Gains in Australia followed a 2.12 per cent jump in the US's Dow Jones Industrial Average, which finished above 9000 for the first time since early January.
IG Markets institutional dealer Chris Weston said after starting strongly the market weakened a bit during the day.
"We opened high, with a nice bit of clout, but since then we have tapered away with a negative bias," IG Markets institutional dealer Chris Weston said.
Mr Weston said gains to big miners had helped the market.
BHP Billiton rose 41 cents to $37.51 and rival Rio Tinto put on six cents to $57.55.
"We did see base metals largely up on the London Metals Exchange," Mr Weston said.
"We also saw a bit of speculation as well that BHP could be looking to do a share buy-back because they have still got a cash surplus," he said.
Other miners finished the day mixed, with OZ Minerals steady at $1.15 and Fortescue Metals Group down eight cents at $4.33.
The price of gold fell and at 16:15 AEST was trading at $US949.25 per fine ounce, down $US3.65 on Thursday's close of $US952.90.
Newcrest Mining rose four cents to $30.68, but Newmont fell five cents to $5.09 and Lihir Gold dropped five cents to $2.80.
Tin miner Metals X surged 1.5 cents, or 13.64 per cent, to 12.5 cents, after signing a deal which may see it sell a controlling stake in its Tasmanian assets to a Chinese company.
Mr Weston said banks opened the day higher but lost ground in later trading amid fears the US market may post falls in their coming session.
"There are just fears in the market that tonight's US session could face a few uphill battles,'' Mr Weston said.
"People are just saying they could see a poor session in the US overnight so they are taking a profit on certain stocks,'' he said.
Commonwealth Bank ended the day 82 cents higher at $39.75, Westpac rose 48 cents to $20.09 and ANZ gained 18 cents to $16.95.
But NAB lost eight cents to $22.27 and Macquarie Group fell $1.80, or 4.31 per cent, to $40.00.
Macquarie Airports announced it will takeover its own management.
Shares in Macquarie Airports dropped 18 cents, or 6.82 per cent, to $2.46.
Energy stocks finished the day mixed, with Woodside Petroleum rising 79 cents to $44.49 and Origin Energy up 24 cents at $14.84.
Shares in Oil Search fell eight cents to $5.59 and Santos dropped six cents to $14.59.
Woodside's quarterly report revealed lower oil prices have savaged the company's second quarter revenues, outweighing higher sales volumes.
Farm chemicals supplier Nufarm announced that Chinese chemical trader, Sinochem Corp, had made enquires about acquiring the business.
Shares in Nufarm finished the day up 13.01 per cent, or $1.28, at $11.12.
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