At 4.15pm (AEDT), the benchmark S&P/ASX200 index was up 86 points, or 1.91 per cent, at 4594, while the broader All Ordinaries index had risen 85.2 points, or 1.89 per cent, to 4604.4.
On the Sydney Futures Exchange, the December share price index contract was 85 points higher at 4597 points on volume of 27,055 contracts.
The local bourse opened in positive territory thanks to a strong finish on Wall Street, and extended its gains through the afternoon after the release of the Reserve Bank of Australia's (RBA) latest growth and inflation forecasts.
"Today the market received a warm feeling from the Reserve Bank commentary," Bell Potter senior adviser Stuart Smith said.
"It engendered confidence in the market."
The RBA said in its quarterly statement on monetary policy that gross domestic product (GDP) was expected to rise by 1.75 per cent in calendar 2009, before improving to a 3.25 per cent growth rate in calendar 2010.
This was up from 0.5 per cent for calendar 2009 and 2.25 per cent for calendar 2010y, forecast in the RBA's previous quarterly statement.
"We don't want them wildly talking about the economy, we certainly don't want to be talking it down, so it is a nice, steady-as-she-goes scenario,'' Mr Smith said.
Gains were broad based on Friday, with mining and resources stocks among the best performers.
BHP Billiton up 96 cents, or 2.63 per cent, at $37.40 and Rio Tinto $2.41, or 3.85 per cent firmer at $65.00.
BHP said on Friday afternoon that repairs to the main haulage shaft at its Olympic Dam uranium and copper mine in South Australia would begin later this month.
Full production at Olympic Dam was expected to begin no later than the end of March next year.
Shares open higher in morning tradeStocks appear headed to sharply higher opening
