MELBOURNE - The Australian share market closed up more than one per cent, buoyed by banking stocks and the big miners.

The benchmark S&P/ASX200 index closed up 69.1 points, or 1.49 per cent, at 4704.2 points, while the broader All Ordinaries index gained 64.9 points, or 1.39 per cent, to 4724.4.

On the Sydney Futures Exchange at 1615 AEDT, the March share price index contract was 62 points higher at 4,683 on 18,065 contracts.

"Key drivers today are banks, which are performing strongly, as are the major miners - BHP and Rio Tinto," said CommSec chief economist Craig James.

"European markets were up in the order of one per cent and there were similar gains in the US market, so we are very much playing follow the leader," he said.

"There is no major bad news around today to unsettle investors, so people are picking up some of the bargains."

Banking stocks were led by Westpac, which gained 80 cents, 3.43 per cent, to $24.15.

National Australia Bank gained 31 cents to be $26.31, ANZ rose 52 cents to $21.47, Commonwealth Bank put on 44 cents to be $52.59 and Macquarie Group rose 89 cents to $46.71.

"European banks were a little bit firmer overnight, that sounded the all-clear to Australian investors and effectively we had some investors picking up bargains," Mr James said.

The big miners rose, with BHP Billiton up 70 cents to $41.65 and rival Rio Tinto up $2.18 to $72.75.

On Tuesday Rio Tinto said tropical cyclone Laurence had not affected its operations in Western Australia, while BHP said the cyclone may cause interruptions to its Pilbara projects.

Gloucester Coal, which is in a trading halt $6.65 is the subject of speculation that Macarthur Coal may be seeking to make a takeover bid.

Macarthur Coal was also in a trading halt, having last traded at $9.71.

The local spot price of gold tracked below US$1,100 per fine ounce and gold producers mostly lost ground.

Lihir was off three cents to $3.15 and Newcrest fell 72 cents to $34.06 while Newmont was steady at $5.38.

Newcrest's flagship Telfer mine in WA had suspended production and was put on red alert as tropical cyclone Laurence approached.

At 1625 AEDT the local spot price of gold was US$1093.10 per fine ounce, down US$19.18 on Monday's closing price of US$1,112.28.

Major energy stocks rose, with Woodside Petroleum up 12 cents to $47.27 and rival Oil Search gained three cents to $5.90.

Santos rose 10 cents to $13.91 and Origin Energy put on 30 cents to $16.52.

Among media companies, News Corp rose 42 cents to $17.89 and its non-voting scrip gained 50 cents to $15.39.

Fairfax gained 5.5 cents to $1.665 and Consolidated Media put on one cent to $3.09.

Making news, the board of agricultural chemicals supplier Nufarm Ltd was in a spin after Sinochem Corporation of China cut its proposed takeover bid by $1 a share or $218 million.

Shares in Nufarm remained in a trading halt and last traded at $10.56.

Grains handler and marketer GrainCorp Ltd fell 43 cents to $5.38 amid an update on its projected earnings for the 2010 fiscal year.

Among retail stocks, Coles owner Wesfarmers gained 23 cents to $29.10 while Woolworths rose 45 cents to $27.14.

Upmarket retailer David Jones gained two cents to $5.35 while rival Myer rose two cents to $3.70.

At 1647 AEDT the top-traded stock by volume was animal healthcare company Monitor Energy, with 270.4 million shares worth $1.28 million changing hands.

Its shares were down 0.1 cents, or 16.67 per cent, to 0.5 cents.

Preliminary national turnover was 1.76 billion shares worth $3.32 billion, with 578 stocks up, 442 down and 357 unchanged.