The S&P/ASX 200 index closed 3.7%, or 143.4 points higher at 4069.9 while the broader All Ordinaries closed 3.5% or 139.6 points higher at 4132.1.

CMC Markets chief market strategist Michael McCarthy told the Australian Associated Press investors retained their optimism that European leaders were preparing a plan to prevent the eurozone debt crisis spreading overseas.

"Quite clearly, the markets are much more comfortable with the European situation despite the fact we haven't seen concrete steps there ... and with pricing in such a bearish scenario anything mildly positive [can push the market significantly higher]," he said.

Major miner BHP Billiton was up $A1.17 to $36.3 while Rio Tinto added $2.98 to $63.28.

Fellow iron ore miner Fortescue Metals Group was up 30c at $4.55 while Atlas Iron gained 20c to $3.

Uranium miner Paladin Energy was the day’s biggest gainer up 16.24%, or 19c at $1.36.

Paladin announced it had completed its previously announced $68 million private share placement to boost its bank balance.

Sundance Resources was the day’s biggest loser, shedding 0.5c to 45.5c.

Base metals on the London Metal Exchange were back in positive territory during afternoon trade in Singapore.

Copper for three-month delivery gained 1.15% to $US6910 per tonne, zinc added 1.08% to $1865/t and nickel added 1.62% to $18698/t at 3.45pm (AEST).

Spot gold was trading 0.19% higher at $US1643.92 in late afternoon trade.

Local gold producer Newcrest Mining closed $A1.20 higher at $35.06, while AngloGold Ashanti was up 23c at $8.60, Kingsgate Consolidated added 20c to $7.44 , while Medusa Mining lost 4c to $6.95

Finally, the Australian dollar was worth US96c at 4.10pm (AEST).