Financials and energy shares were each more than two per cent higher in a broad-based rally which defied US markets closing lower.
The Commonwealth Bank, ANZ and Macquarie Group each gained a little more than two per cent.
Energy shares Beach, Santos and Woodside each rose by a little more than two per cent.
Oil prices were helped to $US81.99 per barrel after unrest in oil producer Kazakhstan and supply outages in Libya.
There were gains of more than one per cent for shares in materials, consumer discretionaries, healthcare, technology, telecommunications, utilities and property.
The benchmark S&P/ASX200 index was up 119.1 points, or 1.61 per cent, to 7477.4 points at 1200 AEDT on Friday.
The All Ordinaries index rose 119.2 points, or 1.55 per cent, to 7798.5 points.
However this is only a partial recovery from Thursday's fall of 2.74 per cent. US Federal Reserve minutes indicating earlier rate hikes triggered the selling.
Investors in the US will look to a monthly jobs report at the end of the week as their next gauge on how the economy is faring amid surging coronavirus infections.
In Australia, some employers are reporting staff and supply shortages due to more infections from the Omicron variant.
On the ASX, Woolworths has withdrawn its bid for Australian Pharmaceutical Industries (API), leaving Wesfarmers as the only suitor.
Woolworths has examined the financial accounts of API but said it could not ensure the financial returns would meet those required by its capital allocation framework.
API shares were lower by 12.57 per cent to $1.51.
Woolworths was higher by 0.21 per cent to $37.51.
Wesfarmers was up 2.15 per cent to $59.33.
James Hardie shares dropped after the company sacked chief executive Jack Truong for "work-related interactions".
Director Harold Wiens has been named interim chief executive.
The company also raised earnings guidance for the financial year to March 31.
Shares were down 3.64 per cent to $51.80.
The big miners improved. BHP gained 2.24 per cent to $43.64. Fortescue rose 1.64 per cent to $20.07. Rio Tinto was better by 1.91 per cent to $103.15.
Miner West African Resources revealed it produced a record amount of gold in the December quarter.
The company also had record gold sales for 2021.
Shares were up 3.62 per cent to $1.28.
The Australian dollar was buying 71.70 US cents at 1200 AEDT, lower from 71.73 US cents at Thursday's close.
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