A record first-half cash profit for the Commonwealth Bank sparked buying in the banking sector and helped drive the local market to a positive finish.
A day after National Australia Bank's record quarterly cash earnings were announced, CBA said its cash profit for the six months to December came in at $3.3 billion.
Investors wil`l receive an interim dividend of $1.32. By the close, CBA shares added 2.1 per cent to $55.07.
NAB's shares built on yesterday's gains finishing up 2 per cent to $25.99 and the ANZ and Westpac benefited from optimism in the sector, both ending around 2 per cent higher.
Macquarie Bank, however, went against the trend, falling 3.3 per cent by the close after posting losses yesterday on a profit downgrade.
The overall strength of the financial sector was offset by a mixed session for the miners after China's move to raise interest rates may have caused some concern about demand for resources.
BHP Billiton shed 0.5 per cent to $46.74, while Fortescue Metals added 0.2 per cent.
Rio Tinto says it is investing close to $1 billion to extend the life of its Marandoo iron ore mine in the Pilbara. Its shares put on 1.2 per cent.
The All Ordinaries index added 12 points to 4,995 and the ASX 200 index put on 14 points to 4,905.
There was also a raft of corporate news released. Building products maker Boral finished the day almost 9 per cent higher at $5.14 after posting a 36 per cent jump in half-year earnings.
Stockland's share price closed up 3.8 per cent; it announced first-half profits have almost doubled when compared to the same time last year.
On the downside, the retailers continued to be sold off as worries about weak consumer spending persist.
David Jones lost 0.9 per cent as did Myer, while JB Hi-Fi shed 1 per cent.
The major supermarket chains also took a hit; Woolworths was down 0.8 per cent and the owner of Coles, Wesfarmers, lost 1.2 per cent.
The Australian dollar was unaffected by China's move to lift interest rates overnight. By 5:00pm (AEDT) it was worth around 101.28 US cents.
On the cross rates it was buying 74.25 euro cents, 83.51 Japanese yen, 63.03 British pence and $NZ1.3126.
West Texas Crude oil was worth $US85.84 per barrel and spot gold was trading at $US1,363.85 an ounce.
