Aust stocks close sharply higher

Local market extends gains after US Federal Reserve said it would keep rates steady.

The Australian sharemarket has extended morning gains, closing more than 1.5%higher after the United States Federal Reserve again voted to keep interest rates on hold at record low levels.

At 4.15pm (AEST), the benchmark S&P/ASX200 index lifted 85.5 points, or 1.59%, to 5,468.2 points, while the broader All Ordinaries index rose 82.5 points, or 1.54%, to 5,446.4 points. 

CommSec analyst Juliette Saly said today's gains were a much-needed comeback following recent days of selling without real reason.

"Everyone was waiting on the outcome of the Fed meeting. We have seen a bit of relief to finally have the meeting over and that [US Fed chair] Janet Yellen has been dovish," Ms Saly said.

"We know she's cautious and the fact she indicated rates could stay lower for longer has investors cheering."

The major miners also rebounded as the iron ore price edged off its lows, trading at $US90.30 overnight. 

"It's encouraging that we did see it come back above $US90 a tonne," Ms Saly said.

"It certainly provided some much-needed support for iron ore players."

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