The Australian share market closed higher for a second trading day on gains from the financial sector, after a strong lead from Wall Street over the weekend.
The benchmark S&P/ASX200 rose 83.5 points, or 1.69 per cent, to 5014.9, while the broader All Ordinaries gained 79.9 points to 5090.1.
On the Sydney Futures Exchange, the September share price index contract added 105 points to 5001.
IG Markets institutional dealer Chris Weston said financial stocks led the market higher after US equities gained on the news that Wall Street financial house Lehman Brothers was now a takeover target.
''That had a knock-on effect on Australian banks,'' Mr Weston said.
ANZ gained 24c, or 1.53 per cent, to $15.91, National Australia Bank rose 54c, or 2.29 per cent, to $24.09, Commonwealth Bank added $1.27, or 3.07 per cent, to $42.65 and Westpac increased 98c, or 4.45 per cent, to $22.98.
US equities gained on Friday, with the Dow Jones Industrial Average putting on 197.85 points, or 1.73 per cent, to close at 11,628.06.
Mr Weston said energy companies declined after the price of crude oil had the biggest decline in 17 years.
Light sweet crude for October delivery fell $US6.59 to close at $US114.59 a barrel on Friday in New York after the US dollar firmed and the world's second-largest oil pipeline, in Turkey, appeared set to reopen.
Santos lost 6c to $18.84, Oil Search dropped 11c to $5.58 and Woodside fell 36c to $56.64.
Gold miners declined after the spot price of the precious metal fell. It closed at $US822.10 an ounce in Sydney, down $US15.60 on Friday's local close of $US837.70 an ounce.
Newcrest lost 37c to $26.64, Lihir fell 4c to $2.29 and Sino Gold dropped 14c to $3.91.
Virgin Blue was the most traded stock, with 48.16 million shares worth $24.89 million changing hands. The airline added 4.5c to 52.5c.
Market turnover was 1.14 billion shares worth $4.81 billion, with 594 stocks rising, 433 falling and 304 unchanged.
The Australian bond market closed steady as local dealers pre-empt weaker US housing data.
At 4.30pm, the yield on the Commonwealth Government March 2019 bond was at 5.790 per cent, slightly down from Friday's close of 5.795 per cent, while the June 2011 bond was at 5.665 per cent, marginally up from 5.662 per cent.
On the Sydney Futures Exchange, the September 10-year bond futures contract was at 94.235, unchanged from Friday's close, while the September three-year contract was at 94.330, unchanged from Friday's close.
US Treasuries were sold on the back of better performing US equities and falling crude oil prices.
But local dealers bought bonds in the afternoon ahead of the release of US existing housing sales for July, where the market forecasts 4.90 million homes exchanged in the month. AAP
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