"We are on the doorstep of the reporting season. It is tough, but they are meeting their numbers and that is serving to underpin the valuation on the market," said Richard Morrow, director at E.L. & C. Baillieu Stock broking.
Shares in Leighton Holdings, Australia's top contractor, jumped 4.2 percent after the company stuck to its profit guidance for the 2012 financial year.
Market sentiment was soothed after Wall Street and European markets recovered as panic over debt crises and a potential global recession subsided, at least for now.
Australian Foundation Investment Company chairman Bruce Teele said he expected markets will remain volatile as economic and financial problems in Europe and the United States continue.
But he said AFIC, with a portfolio of A$4 billion of large and mid-cap stocks, was using the slide in share prices to buy blue-chip stocks.
"We have been selectively buying shares in high-quality companies at very attractive prices, taking a long-term view," Teele said in a letter to shareholders in the country's largest listed investment firm on Monday.
If shares dipped to new lows, Teele said AFIC would resume "careful, modest" buying.
The benchmark S&P/ASX 200 index gained 75 points to 4,247.6 at 0052 GMT. The benchmark rose 0.8 percent last Friday to finish a wild week up 1.6 percent.
New Zealand's benchmark NZX 50 index rose 0.9 percent to 3,244.3.
STOCKS ON THE MOVE
Contract miner Macmahon Holdings jumped 6.9 percent to A$0.54 after it confirmed it was in talks along with Germany's BBM Operta to run Mongolia's major East Tsankhi coal project, part of the massive Tavan Tolgoi coal field.
Reuters reported on Friday that Mongolia's Erdenes Tavan Tolgoi had selected Macmahon and BBM Operta as contractors for the project.
Shares in Newcrest Mining, the world's no.3 gold miner, dipped 1.2 percent in line with a retreat in the gold price.
The miner earlier reported a 36 percent rise in full-year underlying profit, thanks to soaring gold prices and its takeover last year of Lihir Gold, in line with market forecasts.
Shares in Commonwealth Bank slipped 3 percent to A$47.10 as the stock traded without the rights to its dividend.
Shares in glove and condom maker Ansell rose 4.2 percent to A$13.69 after the company posted a 15 percent rise in full-year profit on an 11 percent increase in sales.
Copyright Reuters, 2011