Australian shares rose one per cent in the second consecutive day of gains as financial and real estate companies led the market higher.
The benchmark S&P/ASX200 index was up 43.9 points, or 1.08 per cent, at 4,102.1, while the broader All Ordinaries index gained 41.5 points, 1.01 per cent, to 4,167.3.
On the ASX 24 at 1643 AEDT, the December share price index futures contract was 56 points higher at 4,134, with 34,365 contracts traded.
CMC Markets chief market strategist Michael McCarthy said global economic concerns continued to be main driver of the market.
The local bourse opened more than half a per cent higher after a positive overseas lead.
It was sold off after the government Mid-Year Economic and Fiscal Outlook was published, only to close stronger on short-covering.
The federal government is sticking to its plan to bring the budget back to surplus in 2012/13 after finding a further $11.5 billion in new savings over the next four years.
Mr McCarthy described the day’s trading movements as “market positioning”.
With European finance ministers meeting overnight there was potential for a positive surprise, Mr McCarthy said.
“In that environment, some investors are reducing their underweight positions and some shorts are squaring up their positions,” he said.
Volumes remained thin, so there wasn’t a great deal of conviction in trade on Tuesday, he said.
Mr McCarthy said it was unlikely the market was giving much weight to a French report that claimed Standard & Poor’s may give France a negative outlook within 10 days.
He said the property trust sector performed strongly, with Mirvac Group gaining 3.5 cents to $1.255 and Westfield Group up 29 cents, or 3.73 per cent, at $8.06.
The worst performing stock on S&P/ASX 50 index was beverage maker Coca-Cola Amatil, down 29 cents at $11.57.
Market heavyweight BHP Billiton was up 13 cents at $34.98 and Rio Tinto rose 23 cents to $63.50 while Fortescue eased five cents to $4.65 after a six per cent dip in spot iron ore prices overnight.
In the energy sector, Woodside Petroleum put on 75 cents, or 2.3 per cent, to $33.35 and Santos gained 16 cents, or 1.26 per cent, to $12.82.
The major banks were all around one per cent higher. Westpac added 19 cents at $20.45, Commonwealth Bank was up 48 cents at $47.37, ANZ was 31 cents stronger at $19.51 and National Australia Bank added 36 cents tot $23.10.
Making headlines, laboratory testing services group Campbell Brothers reported a jump in first half profit and forecast a surge in its full year result.
Campbell Brothers was steady at $49.00.
Retailer Harvey Norman said it wasn’t expecting a wonderful Christmas season after consumer electronics sales copped a hiding in 2011.
Harvey Norman finished two cents firmer at $2.05.
The spot gold price in Sydney at 1640 AEDT was $US1,712.80 per fine ounce, up $US6.80 from $US1,706 per fine ounce on Monday.
National turnover was 2.06 billion shares worth $4.34 billion, with 562 stocks up, 438 down and 375 steady.
