THE sharemarket has closed at its highest level for this year, with stronger commodity prices leading to gains for the big miners.
At the close, the benchmark S&P/ASX 200 Index was up 18.1 points, or 0.4 per cent, at 4576. The previous closing high of 4571.1 points was struck on October 19 and the market is now nearly 13 per cent higher for the year.
CMC Market analyst Ric Spooner said iron ore and copper prices had been strong in the past few days, giving momentum to the big mining companies.
The market was finishing the year strongly, with investors not as gloomy as they had been, amid hopes of Chinese stimulus in the new year and optimism that the US will somehow resolve their debt-related fiscal cliff negotiations.
"Investors acting on the view that looking forward the most likely scenario next year is moderate growth in most international economies including ours," Mr Spooner said.
"Low interest rates is a newer phenomenon in Australia and taking on more risk, getting into equities or a rebalancing of portfolios towards equities is looking a sensible, alternative moderate growth scenario."
BHP Billiton jumped 46¢ to $35.41, Rio Tinto surged 47¢ to $61.77 and Fortescue gained 16¢ to $4.21.
The owner of the radio station at the centre of the Duchess of Cambridge prank call affair, Southern Cross Austereo, was up 3¢ at $1.07, rebounding from a 5.8 per cent fall on Monday.
Among other media stocks, Ten Network edged higher after the stock fell about 9 per cent on Monday following the first part of its $230 million capital raising.
The price of gold closed at $US1709.39 an ounce, up US74¢.
Meanwhile, the dollar was trading slightly stronger, despite a weak reading for domestic business confidence and ahead of a meeting of the US central bank. Late on Tuesday it was trading at $US104.82¢, up from $US104.78¢.
CMC Capital Markets strategist Michael McCarthy said potentially negative events last week, and a weak business survey on Tuesday, had failed to weaken the dollar.
"We saw a very weak string of data last week, we had an interest rate cut, we saw a strong US dollar, and none of it was enough to get the Aussie dollar down," he said.