Update Australian shares soared after renewed efforts by governments at home and abroad to bolster banks sparked renewed confidence in financial stocks and big miners..
Bank stocks were among the biggest gainers today after $190 billion was erased from the Australian stock market last week.
The benchmark S&P/ASX 200 index ended the day up 220 points, or 5.6%, to 4,180.7 points, recovering most of Friday's 8.2% rout.
The Australian dollar, meanwhile, pared gains, to trade recently at 66.06 US cents, after earlier hitting 68 US cents. Against Japan's currency, it advanced 66.06 yen, also off its morning highs of 68.80 yen.
Movements on overseas markets provide some cause for optimism that today's share market gains will be sustained. Most Asian markets were trading higher, with Hong Kong's main index up 3%. Dow futures are also pointing to a gain of 323 points, or almost 4%, to 8693, for Wall Street when it opens later tonight.
Confidence in Australian banks was buoyed by Prime Minister Kevin Rudd's announcement yesterday that all deposits in Australian financial institutions would be guaranteed for three years.
Mr Rudd said the guarantee is aimed in part at ensuring Australian banks would not be at a disadvantage if overseas rivals got government backing and capital injections, as is planned in Europe and elsewhere. European leaders overnight unveiled a combined effort to restore market confidence.
Financials higher
Almost all sectors of the market were trading higher, with the financials leading the way, gaining about 7.7% overall. The materials sub-index jumped 6%.
''The banks are definitely leading this market higher and it's all in reaction to the guarantee plans that have been announced by the federal government,'' EL&C Baillieu director Richard Morrow said.
Banking stocks were favourites, with ANZ Bank ended the day at its highs, adding 13%, or $2, to $17.30.
The Commonwealth Bank advanced 6.7%, or $2.65, to $42.20, NAB was up 7.7%, or $1.60, to $22.40 and Westpac surged 9%, or $1.81, to $22..
Among the smaller banks, St George also jumped 9.8%, or $2.47, to $27.66.
Suncorp-Metway fell 2.4%, or 22 cents, to $9.05 after announcing that it was reconsidering the sale of assets, reversing early gains.
