At 4.15pm (AEST), the benchmark S&P/ASX200 was up 38.8 points, or 0.87 per cent, at 4489.6, while the broader All Ordinaries added 37.8 points, or 0.85 per cent, at 4495.9.
The major indices finished the week at their best levels since October 7, 2008, a time when global markets began to fall as troubled insurer American AIG received a second bailout from the US Government.
The local bourse advanced weaker European indices and marginal gains on Wall Street.
EL & C Baillieu Stockbroking director Richard Morrow said profit-takers had swooped on some companies after they reported earnings results earlier in the week.
"There are a few deals being done, there are a few sectors that have been oversold this year and are fighting back, like financials, and QBE and Macquarie Group are a beneficiary of that today,'' he said.
"And there's profit-taking in stocks that did well earlier in the week.''
QBE finished 90 cents, or 4.05 per cent, higher at $23.10, while Macquarie Group added 91 cents, or 1.89 per cent, to $48.95.
Mr Morrow said profit-takers had targeted Nufarm, Woolworths, Westfield and Leighton in the aftermath of their earnings results.
Nufarm closed 6.05 per cent lower at $11.34, Woolworths lost 1.67 per cent at $28.30, Westfield fell 3.18 per cent to $12.50 and Leighton was down 0.35 per cent at $36.58.
Financials were in positive territory at the close.
NAB was up 1.57 per cent to $27.81, ANZ added 0.69 per cent to $20.46, Westpac was or 1.29 per cent higher and Commonwealth Bank gained 40 cents to $45.15.
Resources stocks gained.
BHP Billiton was up 20 cents to $37.85 and Rio Tinto firming 14 cents to $57.30.
Energy stocks were also higher.
Oil Search led the oil sector higher, jumping 5.99 per cent to $6.37, while Santos put on 2.19 per cent to $15.89 and Woodside Petroleum added 90 cents to $49.70.
Gold stocks were mostly lower, with Newcrest Mining losing 42 cents, to $29.20 and Newmont Mining falling 1 cent to $4.79.
Lihir Gold closed steady at $2.72.
By 4.36pm the spot price of gold in Sydney was $US950.40 per fine ounce, up $US4.15 on yesterday's close of $US946.25.
On the Sydney Futures Exchange, the September share price index contract was 17 points higher at 4466 on 4870 contracts.
Shares close at 10-month highJump in energy demand fuels stocks
