Resources drive market higher

The share market rose 0.9% on Friday as resource stocks, led by gold and oil companies, surged on higher commodity prices and the banks pared early losses.

The benchmark S&P/ASX200 index gained 42.5 points to 4979.9, while the broader All Ordinaries added 47.3 points, or 0.9%, to 5067.8.

The September share price index futures contract rose 27 points to 4973 on a total volume of 20,301 contracts.

Macquarie Equities Brisbane adviser Helen Spencer said resource stocks were today's big winners.

"Oil and gold were up strongly overnight, so we've had very strong performances from stocks like Woodside and Newcrest Mining,'' Ms Spencer said.

Local banks fell in early trade after US mortgage finance companies Fannie Mae and Freddie Mac fell sharply on Wall Street overnight amid continued doubts about their access to financing.

The banks recovered somewhat towards the end of the session on reports the US government may bail out the troubled mortgage giants.

"The banks have finished well off their lows today, so there's definitely some buyers trying to get them on the dips,'' Ms Jarvis said.

BHP Billiton gained $1.55, or 4%, to $40.35 and Rio Tinto found $4.40, or 3.6%, to $126.00.

Woodside surged $2.70, or 4.7%, to $60.60 and Santos grew by 49 cents to $18.95 as light sweet crude for August delivery rose $US5.60 to $US141.65 a barrel on the New York Mercantile Exchange.

The spot price of gold was $US942.45, up $US13.35 on last night's Sydney close.

Newcrest Mining jumped $1.64, or 5.5%, to $31.47, Newmont firmed 18 cents to $5.12 and Lihir Gold advanced 19 cents, or 6.3%, to $3.23.

Bauxite miner Alumina was one of the day's biggest gainers, finding 33 cents, or 7.8%, to $4.56 on a soaring Aluminium price and forecasts the Varanus Island gas explosion would hurt it less than expected.

National Australia Bank dropped 16 cents to $27.45 after warning it could have to book more writedowns linked to investments in risky collaterilised debt obligations. NAB also announced it was in talks to buy investment bank ABN Amro in Australia and New Zealand.

Commonwealth Bank of Australia jacked up its variable home loan rate another 14 basis points and its shares fell 23 cents to $40.32.

ANZ lost 42 cents to $17.95, Westpac lost six cents to $19.01 and St George lost five cents to $25.44.