Aust stocks close higher

Local market lifts over 1.6% as investors hope US lawmakers' negotiations will lead to a debt ceiling deal and end the shutdown.

The Australian stock market posted its largest one day gain in over three months as investors hoped a meeting between United States Democrats and Republicans would lead to a debt ceiling deal and an end to the government shutdown.

At the 1615 AEDT official market close, the benchmark S&P/ASX200 index spiked 1.63% to 5,230.9, while the broader All Ordinaries index lifted 1.61% to 5,228.8 points.

Volumes were slightly lower than average in the local market today but some investors sought to buy at low levels on renewed optimism about the negotiations.

US President Barack Obama and Republican House leaders held a meeting that lasted over an hour to discuss the Republicans' proposal to raise the debt ceiling for six weeks, with more negotiations planned.

The White House then released a statement saying the president looked forward to "making continued progress with members on both sides of the aisle".

IG analyst Chris Weston said volatility readings are falling as Republicans "look desperately to do something about their ailing PR and reach out to the Democrats".

"Asian markets are acting like we have already seen agreement on extending the debt ceiling through to November 22," Mr Weston said.

"The market wasn’t even really interested in whether the White House had agreed to any potential  proposal; it took enough heart from the fact that the Republicans were simply playing ball."

The local market lifted 0.4% for the week on today's gains, after earlier looking to close the week lower.

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