Renewed demand for banking stocks has driven the overall Australian sharemarket higher.
The benchmark S&P/ASX200 index was up 34.1 points, or 0.71 per cent, at 4825.9.
The broader All Ordinaries index was up 29.5 points, or 0.62 per cent, at 4805.
Options Xpress market analyst Ben Le Brun said banking stocks sparked a terrific turnaround during the day, pushing the local market higher after losses earlier in the session.
"It looks like bargain hunters and traders are ready to take a position prior to the Fed's meeting," he said.
Local investors are nervous ahead of the US Federal Reserve's policy board meeting on Wednesday, amid speculation the Fed will soon wind back its third round of bond purchases, known as quantitative easing.
"Some traders are starting to question if and when that's going to happen," Mr Le Brun said.
"It might not be on the agenda for at least a couple more months and that's going to be very positive for risk assets across the board."
Still, investor appetite for higher-yielding banking and telco stocks has continued, and mining shares were sold off amid concerns about demand in China.
In the banking sector, ANZ rose 63c, or 2.2 per cent, to $28.45, Westpac rose 53c, or 1.8 per cent, to $29.47, Commonwealth Bank rose $1.37, or 2.04 per cent, to $68.47 and National Australia Bank rose 54c, or 1.8 per cent, to $29.92.
Among the miners, Rio Tinto fell 33c to $53.65 and BHP Billiton fell 11c to $32.80.
Fortescue Metals Group fell 9c, or 2.7 per cent, to $3.25.
Making news, construction giant Lend Lease announced it would merge its Australian construction and infrastructure businesses.
The company also said earnings from construction activities were down, and its shares fell 70c, or 7.49 per cent, to $8.65.
At 4.15pm AEST, the June share price index futures contract was 48 points higher at 4833, with 109,019 contracts traded.
National turnover was 1.3 billion securities worth $4.3 billion.
