The S&P/ASX200 rose 61.5 points on Tuesday, up 0.68 per cent, to 9,164.6, as the broader All Ordinaries gained 58.2 points, or 0.62 per cent, to 9,374.9.
The move was fuelled by a 0.9 per cent rebound in financials as dip-buyers picked up neglected banking stocks, while consumer staples rallied after Coles flagged strong results and a major network expansion.
Consumer discretionaries, IT stocks and health care stocks also posted solid gains.
"The breadth of the gains suggests investors are becoming more comfortable stepping back into risk, rather than simply chasing strength in one or two pockets of the market," Vantage senior analyst Hebe Chen told AAP.
Despite a welcome rebound for banks, they were not out of the woods just yet.
"The underlying pressure on the banks — particularly growing concerns around the mortgage market — has not disappeared, with weaker demand pointing to a tougher and potentially extended squeeze on credit growth, even if it does not translate into an immediate earnings squeeze," Ms Chen said.
Energy was the only sector to end the day significantly lower, losing 0.8 per cent as oil prices dipped on reports Iran was working with Pakistani mediators to restore a memorandum of understanding with the US.
The fading crude price weighed on Woodside shares, which fell 1.4 per cent despite the company's bumper first-half $1.9 billion underlying profit — fuelled by a 20 per cent higher realised oil price in the six months to June 30 compared to a year earlier.
Refinery operator Viva Energy also slumped after being unable to confirm when its fire-impacted Corio facility near Geelong would return to 100 per cent capacity.
Basic materials soared to new heights as segment and index giant BHP reset its all-time high for a second straight session, topping $68 for the first time as copper prices continued to rise.
Gold stocks were broadly higher as the precious metal's recent rally appeared to run out of steam, easing slightly from 15-week highs to trade at $US4,641 ($A6,496) an ounce.
The so-called digital gold of Bitcoin was trading at its highest price since May, topping $US80,000 ($A111,918) after US government bond market intervention reignited the "debasement trade" late last week.
Looking ahead, earnings season continues on Wednesday, with Tabcorp, Woolworths, Nine Entertainment, Domino's, WiseTech and Flight Centre among the names reporting, with Wesfarmers, South32, Qantas and Star to follow on Thursday.
The Australian dollar is buying 71.45 US cents, down from 71.69 US cents on Monday at 5pm, ahead of Wednesday's July inflation print.
ON THE ASX:
* The S&P/ASX200 jumped 61.5 points, or 0.68 per cent, to 9,164.6
* The broader All Ordinaries gained 58.2 points, or 0.62 per cent, to 9,374.9
One Australian dollar trades for:
* 71.45 US cents, from 71.69 US cents at 5pm AEST on Monday
* 113.89 Japanese yen, from 113.99 Japanese yen
* 61.31 euro cents, from 61.39 euro cents
* 52.42 British pence, from 52.55 pence
* 120.01 NZ cents, from 120.00 NZ cents
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