THE Australian market finished on a 16-month closing high as US politicians appeared to make progress on their budget negotiations.
At close on Tuesday, the benchmark S&P/ASX 200 index was up 21.8 points, or 0.48 per cent, at 4595.2 points, while the broader All Ordinaries index had risen 22.5 points, or 0.49 per cent, to 4610.5.
On the ASX 24, the December share price index futures contract was 29 points higher at 4602 points, with 167,860 contracts traded.
Australian Stock Report's head of research, Geoff Saffer, said the Australian market had its highest close since late July 2011 after US politicians appeared to be making progress on their "fiscal cliff" negotiations.
Just two weeks remain before tax increases and government spending cuts, referred to as the fiscal cliff, start taking effect in the US if no deal is reached.
"I think it was mainly widespread buying today on hopes that US politicians will reach a compromise before the end of the year," he said.
Mr Saffer said the Reserve Bank's minutes of its December board meeting also suggested that the cash rate could be cut further next year, which prompted further investor buying.
The Australian market recorded gains across the board with mining, utilities and healthcare the best performing sectors.
BHP Billiton rose 31¢ to $36.66, Rio Tinto soared $1.18 to $64.70 and Fortescue gained 13¢ to $4.60.
Uranium miners rallied for a second session, boosted by the pro-nuclear Liberal Democratic Party Japan's election landslide.
Paladin Energy jumped 12.4 per cent to $1.08, helped by an upgrade from UBS analysts to buy, while ERA Resources rose 7.3 per cent to $1.33.
Toro Energy shares fell 4.4 per cent when the West Australian government delayed a decision on the Wiluna uranium project until March.
The four banks all finished in positive territory. ANZ was up 2¢ to $24.51, National Australia Bank gained 12¢ to $24.60, Westpac added 6¢ to $25.81 and Commonwealth Bank jumped 16¢ to $61.45.
The Commonwealth is taking control of John Symond's Aussie Home Loans, increasing its stake to 80 per cent and extending its position as the number one home lender.
The spot price of Sydney gold closed at $US1702.59, up $US10.84 from Monday's close of $US1691.75.
Market turnover was 1.77 billion securities worth $4.99 billion, with 536 stocks up, 434 down and 352 unchanged.