The benchmark S&P/ASX200 index was up 46.6 points, or 0.97 per cent, at 4859.4 points while the broader All Ordinaries index rose 40.9 points, or 0.85 per cent, to 4859.7 points.
"We're definitely seeing most of the strength coming through from banks," CommSec market analyst Juliette Saly said.
NAB rose 19 cents to $30.91, Westpac advanced 80 cents, to $27.30, Commonwealth Bank appreciated $1.70 to $56.24 and ANZ put on 32 cents to $23.85.
"Also, the big miners are managing to shake off generally lower commodity prices, which is good to see, considering we saw them under pressure during the week," Ms Saly said.
BHP Billiton was up 54 cents, or 1.36 per cent, at $40.20 and Rio Tinto added 70 cents, or 1.05 per cent, to $67.50.
Wesfarmers announced on Friday that Coles had a solid performance in the first quarter of 2009/10 helped by rising food and liquor sales and an improvement in consumer confidence.
Wesfarmers shares jumped $1.82, or 6.88 per cent, to $28.26, while Woolworths fell 10 cents to $29.31.
Woodside Petroleum reported a plunge in year-on-year September quarter revenue due to reduced sales volumes and lower commodity prices, and says the collapse of a potential gas purchase deal with Apache Corporation won't affect its Pluto expansion plans.
Ms Saly said some analysts were concerned that talks between the parties had been terminated.
Woodside was down 94 cents, or 1.78 per cent, at $51.80.
Oil Search slipped two cents lower to $6.11 and Santos retreated 11 cents to $15.55.
In other news, shares in Nick Scali closed at an 18-month high of $1.31, up six cents or 4.8 per cent, after the furniture retailer said it was expecting a 77 per cent jump in first half 2010 profit.
At 16:18 (AEDT), the spot price of gold in Sydney was $US1061.70 per fine ounce, up $US2.83 on yesterday's close of $US$1058.87.
Newmont was five cents stronger at $4.97, Lihir Gold inched two cents higher to $3.23 and Newcrest backtracked one cent to $35.47.
On the Sydney Futures Exchange at 16:16 (AEDT), the December share price index contract was 41 points higher at 4860 points on a volume of 17,030 contracts.
Shares open higher, led by energy sectorFirst Horizon loss narrows
