Australian shares recovered from early lows to end the day at a fresh six-month closing high, boosted by banks, but a strong recent rally sparked some profit taking in big winners such as BHP Billiton.
And signals from offshore point to a continuation of the rally early next week. When the SPI 200 futures index last traded on Saturday, it was 44 points higher at 3969.
In the final trading session for the week, the Dow Jones Industrial Average rallied 164.96 points, or 1.96%, in final trades to 8574.81, as the market capped its eighth weekly gain in the past nine weeks.
At the close on Friday, the benchmark S&P/ASX200 index was up 3 points, or 0.1%, to 3941.7, while the broader All Ordinaries Index rose 7.5 points, or 0.2%, to 3919.6. For the week the ASX gained 3.9%, while the All Ords rose 4.8%.
Among the sectors, energy shares rose 0.8% today, while finance shares gained 0.7% and materials were up 0.5%.
Sentiment for banks was supported by news that US banks would not need to raise as much capital as previously thought to survive the global financial crisis, traders said.
"It's really the big four banks that are pushing us higher. It's largely more confidence returning to the market, especially after those bank stress tests were released. A bit of cash is coming back onto the table,'' said David Taylor, analyst at CMC Markets.
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After the strong gains for the week, analysts said the recent could run into some profit taking.
"It's reasonable to expect some sort of pull back," said David Jones-Prichard, executive director, equity derivatives & structured products at JPMorgan.
"What I would say though is that the momentum is certainly being fairly strong and from a trading point of view, it makes sense to run with that momentum,'' he added.
The Reserve Bank of Australia released its quarterly monetary policy statement on Friday, cutting its forecasts for the pace of economic growth over this year and 2010 while signalling any future interest rate cuts may be smaller and less frequent, ahead of an expected recovery.
National Australia Bank gained 66 cents to $22.78, Westpac was up 29 cents at $20.60 and Commonwealth Bank had advanced 66 cents to $36.74, while ANZ shed 14 cents to $16.49.
BHP Billiton lost 38 cents, or 1.1%, to $35.31, while rival mining giant Rio Tinto gained 56 cents to $71.60.
Making headlines today, Telstra replaced its two leaders, appointing current senior executive David Thodey as chief executive, and current board member Catherine Livingstone as chair.
After initially rising on the news, Telstra shares ended the day 1 cent weaker at $3.23.
Its rival and Optus owner Singapore Telecommunications was steady at $2.55.
Securities in ports an rail operator Asciano rose by 38 cents, or 27%, to $1.81 on speculation that a takeover bid could be in the wings.
Sleep management company ResMed said revenue and profit for the third quarter of the 2008/09 financial year reached record levels as it boosted sales in America.
ResMed gained 22 cents, or 4.2%, to $5.44.
Energy stocks were mixed, with Woodside up 34 cents at $43.90, Santos down 31 cents at $17.09 and Oil Search off three cents to $5.49.
Lihir Gold was steady at $3.00, Newcrest had put on nine cents to $30.10 and Newmont gained three cents to $5.59.
Media stocks were weaker.
Fairfax lost one cent to $1.13, News Corp fell 19 cents to $14.37 and its non-voting scrip dropped 48 cents to $12.72.
Seven Network reversed five cents to $5.85, Ten Network lost 0.5 cents to 97 cents and Consolidated Media fell seven cents to $2.42.
Qantas was steady at $2.10 and Virgin Blue lost 0.5 cents to 29.5 cents.
Iron ore miner Admiralty Resources was the top traded stock by volume, with 71.03 million shares changing hands worth $1.8 million.
Its shares were down 0.2 cent, or 7.7%, at 2.4 cents.
Preliminary national turnover reached 2.16 billion shares, worth $4.35 billion, with 611 stocks up, 437 down and 298 unchanged.