SYDNEY- The Australian share market closed higher for the second day running, led by gains in the resources sector on the back of higher commodity prices.

The benchmark S&P/ASX200 index was up 49 points, or 1.29 per cent, at 3,856, while the broader-based All Ordinaries index was 49.3 points higher, or 1.3 per cent, to 3851.5 points.

On the Sydney Futures Exchange, at 1615 AEST the September share price index contract was 56 points higher at 3,825 on a volume of 22,369 contracts.

Burrell stockbroking adviser Daniel Manley said the market had finished Thursday with a rally after a fairly sluggish afternoon.

"It's been a strong close into the afternoon," Mr Manley told AAP.

"It was a pretty strong night with the base metals, and it seems there's been a bit of a delayed reaction."

Mr Manley said the standout performers were in the resources sector.

Sims Metal Management put on $1.84, or 7.75 per cent, to $25.59, Karoon Gas gained 82 cents, or 11.08 per cent, to $8.22, while Arrow Energy was up 24 cents, or 7.21 per cent, at $3.57.

"I think investors are pre-empting another pretty strong night among commodities," Mr Manley said.

"There's also been a bit of bargain-hunting after a pretty ordinary week and a bit."

BHP Billiton, which observers say may be preparing to offload its mothballed Ravensthorpe nickel project in Western Australia, surged 79 cents to $34.52.

Rival Rio Tinto added $2.19, or 4.42 per cent, to close at $51.79.

Oil stocks were stronger, despite the oil price dipping in New York overnight.

Woodside finished up 67 cents at $42.03, Santos grew by 15 cents to $14.16 and Oil Search put on seven cents to $5.34.

The major banks all finished the day in positive territory.

Commonwealth Bank rose 52 cents to $37.55, ANZ grew five cents to $16.05, National Australia Bank gained five cents to $21.50 and Westpac was up 30 cents at $19.51.

In news this Thursday, West Australian Newspapers announced it was shedding more staff than previously flagged.

Its shares lost 12 cents, or 2.7 per cent, to $4.32.

Coca-Cola Amatil shares were three cents weaker at $8.45 even though chief executive Terry Davis reiterated that the local bottler expects to post a record first half profit.