Aust stocks close 1% higher

Local market holds onto morning gains to finish above the 5100 mark as banks rally.

The local market closed one per cent higher today, holding early gains as financials recovered from yesterday's drop caused by reports of the banking levy.

At 1615 AEST official market close, the S&P/ASX 200 benchmark index rose 1.09% to 5,116.8 points, while the broader All Ordinaries index lifted 1.02% to 5,098.7 points.

IG markets analyst Stan Shamu said banks were recuperating.

"Our two biggest sectors (materials and financials) are firing today and have led the market higher," Mr Shamu said.

"However, gold miners are underperforming as the USD strength weighs on the precious metal."

"The weaker AUD and prospects of a 25 basis point rate cut next week are the factors keeping investors optimistic heading into the weekend."

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