The S&P/ASX 200 index jumped 86.56 points to 5,350.40 by 1229 GMT, its biggest daily percentage gain since Oct.5. The benchmark rose 0.3 percent on Thursday.
Trading has been subdued for much of this week as investors were wary ahead of key events, including the now-concluded ECB meeting, and next week’s policy reviews of the U.S. Federal Reserve and the Bank of Japan.
A sluggish start to U.S. corporate earnings season had also dulled investor appetite, but thanks to Friday’s stellar performance the index is on track to end the week up 1.6 percent.
For the month so far, it is up nearly 7 percent, on track for its best performance since Oct 2011.
Major banks led the gains, with National Australia Bank rising 2.1 percent after it raised mortgage rates. Commonwealth Bank of Australia and ANZ Banking were up 1.4 percent each.
Miners BHP Billiton and Rio Tinto rose 2.3 percent and 1.8 percent respectively while Fortescue jumped 2.4 percent.
Wesfarmers climbed 2.4 percent after first quarter data showed that Coles supermarkets gained more sales and market share amid an intensifying price war with Woolworths and German discount grocer Aldi Inc
National Australia Bank and Australia and New Zealand Banking Group on Friday became the last of the four major lenders to increase variable mortgage rates, aiming to cover the costs of tougher capital rules.
The rate hikes could help boost annual earnings at Australia’s biggest lenders by 2 percent to 3 percent, analysts said, despite the banks’ claims that they are merely passing on high costs.
Regulators have ordered Australia’s banks to hold more capital against their mortgage books, forcing the biggest lenders to raise over A$20 billion ($14.42 billion) since May. It had been expected to hold rates at record lows of 2.0 percent.
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