THE Australian share market gained almost two per cent as investors remained optimistic European leaders were approaching a resolution of the Eurozone debt crisis.
The local bourse opened almost two per cent higher after strong leads from US and European markets.
Commsec market analysts Steven Daghlian said investors - even in the US - were turning their focus to the European debt crisis, with confidence kept afloat by comments from French and German leaders on Wednesday that they were determined to keep debt-ridden Greece in the Eurozone.
Shares gained little in the afternoon, after the morning's gains, and closed about ten points off their highest levels in intra-day trading.
At the close today, the benchmark S&P/ASX200 index was up 77.7 points, or 1.9 per cent, at 4149.4, while the broader All Ordinaries index rose 76.7 points, also by 1.9 per cent, to 4229.9.
RBS Morgans Ipswich manager Tony Russell said investors were typically cautious today about what would happen overseas while the local market was closed on the weekend.
"We've heard a lot of rhetoric and no clear decisions have come through and I think that will still maintain this volatility that we've seen over the last three to four weeks," he said.
Mr Russell said money was flowing back into equities, with the resources sector bouncing back after feeling the brunt of recent market losses.
Among the miners, BHP Billiton rose 60 cents, or 1.6 per cent, to $38.23, while fellow miner Rio Tinto gained $1.89, or 2.7 per cent, to $71.27.
Energy stocks were the strongest performers to the close, with the sector gaining 2.9 per cent after oil prices soared on offshore markets.
Woodside Petroleum gained $1.04, or 3.1 per cent, to $34.25, Oil Search rose 15 cents to $6.10 and Santos was 24 cents higher at $11.45.
The best performing stock of the top 100 companies on the ASX was property company Goodman Group, which was up 7.5 per cent at 64.5 cents. ConnectEast Group was the worst, falling two cents, or 3.9 per cent, to 49 cents.
Turnover was 2.44 billion shares changing hands for $5.30 billion, with about eight out of 10 stocks rising.
On the ASX 24, the December share price index (SPI) futures contract rose 73 points to 4170 points, with 34,997 contracts traded.
The closing price of gold in Sydney was $US1,765.89 per ounce, down $US44.64 fromYesterday's $US1810.53, after gold fell two per cent to three-week lows on overseas markets yesterday, further diminishing bullion's appeal as a safe haven.
Shares in gold miner Newcrest were steady at $38.11.
