Australian shares gained about $35 billion in value as buyers and confidence returned, amid hopes of a comprehensive fiscal stability plan for Europe that also led to a rally on offshore markets.
The benchmark S&P/ASX200 index was up 113.1 points, or 2.73 per cent, at 4,255 points, while the broader All Ordinaries index gained 110.2 points, or 2.62 per cent, to 4,313.6 points.
The December share price index futures contract was up 93 points at 4,249 points with 36,076 contracts traded.
Global markets surged on optimism about a meeting of European leaders to thrash out a plan for the eurozone’s economic woes, with Wall Street also boosted by some strong earnings reports.
EU leaders on Sunday agreed to plans to boost the firepower of the eurozone rescue fund – the European Financial Stability Facility – and backed plans to recapitalise banks that would be hit by a massive writedown of Greek debt.
They also pressed Italy to slash its debt mountain, and ruled out tapping the European Central Bank’s balance sheet to boost the rescue fund.
CommSec market analyst Juliette Saly said positive overseas leads boosted local investor sentiment to make a great start to the trading week, albeit on low trading volumes.
National turnover was 1.69 billion shares worth $4.09 billion, with 654 stocks up, 344 down and 358 steady.
The price of gold closed at $US1,653.55 per fine ounce, up $24.67 from $US1629.18 on Friday.
Gains were across the board but strong Chinese manufacturing data added extra momentum to mining stocks, as did comments from Rio Tinto chief executive, Tom Albanese, that long-term demand for commodities remained strong, Ms Saly said.
Rio Tinto advanced $3.06, or 4.89 per cent, to $65.63, BHP Billiton closed up $1.15, or 3.22 per cent, at $36.85 and Fortescue Metals jumped 36 cents, or 8.47 per cent, to $4.61.
Ms Saly said Caltex was also a strong performer, up 77 cents, or 5.83 per cent, at $13.98.
She also singled out drug developer Pharmaxis, which is a step closer to marketing a new treatment for cystic fibrosis in Europe.
Pharmaxis shares soared 47 cents, or 50 per cent, to $1.41.
In the energy sector, Woodside was up $1.21, or 3.62 per cent, at $34.59, Oil Search rose 14 cents, or 2.38 per cent, to $6.02 and Santos was 42 cents, or 3.47 per cent, higher at $12.54.
The big four banks were all more than two per cent stronger.
ANZ climbed 50 cents to $21.71, National Australia Bank was up 62 cents at $24.94, Commonwealth Bank put on $1.23 to $48.78 and Westpac appreciated 66 cents to $22.16.
Making headlines on Monday, Origin Energy reaffirmed its forecast of a 30 per cent rise in underlying profit this financial year and again defended its coal seam gas operations.
Origin shares were up 54 cents, or 3.84 per cent, at $14.59.
Namibia-focused uranium explorer Bannerman Resources has cooled on a $144 million takeover bid by China’s Hanlong Mining, saying it will shop around for alternative corporate deals.
Bannerman shares finished down 2.5 cents, or 7.81 per cent, at 29.5 cents.
