Materials and financial stocks drove Australian shares higher...

Materials and financial stocks drove Australian shares higher on Thursday, fuelled by gains in commodity prices and an overnight surge on Wall Street.

The S&P/ASX 200 index (xjo) rose 0.9 percent or 52.80 points to 5,808.50 by 0311 GMT. The benchmark ended 0.7 percent higher Wednesday.

The overnight rally in Wall Street was helped by financial stocks which rose after the Federal Reserve ratified plans from U.S. banks to use extra capital for stock buybacks and dividends.

Christopher Conway, head of research and trading at Australian Stock Report, said that after a great deal of commentary over bank taxes and risks in the property market, any positive coverage of financial institutions was likely to be welcomed by Australian investors.

The financials index .AXFJ rose as much as 1.6 percent to its highest in more than a month.

The "Big Four" banks were among the top five gainers on the benchmark after they rose between 1.6 percent and 2.1 percent.

Bank of Queensland Ltd (BOQ) rose as much as 2.6 percent to its highest since May 23 while Macquarie Group Ltd (MQG) climbed 2.1 percent.

The benchmark also gained some support from iron ore which rallied more than 3 percent on Wednesday, hitting its highest in a month [IRONORE/].

The metals and mining index .AXMM advanced 2.1 percent, its biggest intraday percentage gain in over two months.

BHP Billiton Ltd (BHP) rose as much as 2.4 percent, its best day since April 10. Miners Rio Tinto Ltd (RIO) climbed 2.3 percent while South32 Ltd rose as much as 2.6 percent to a two-week high.

The three miners and the mining index are on track to record a sixth session of gains.

Gold prices also rose overnight as the dollar weakened for a second straight day. [GOL/]

Newcrest Mining Ltd (NCM) climbed 1.2 percent while Evolution Mining Ltd (EVN) rose 4.3 percent.

Real-estate was down with Aveo Group (AOG) and BWP Trust (BWP) each falling 3.5 percent.

New Zealand's benchmark S&P/NZX 50 index (nz50) rose 0.6 percent or 43.89 points to 7,668.38.

Healthcare and consumer discretionary stocks led the broad based gains on the index.

Retirement community operator Summerset Group Holdings Ltd (SUM) advanced 4.8 percent while online marketplace operator Trade Me Group Ltd (TME) hit a one-month high after rising as much as 1.9 percent.

New Zealand's business confidence hit a nine-month high in June which was led by the agricultural sector, an ANZ Bank survey showed on Thursday.