Australian shares closed higher in a holiday-shortened trade on Friday, as fears about the Omicron variant of the coronavirus receded, with wealth manager AMP Ltd rallying after divesting its infrastructure debt platform.

The S&P/ASX 200 index ended 0.4% higher at 7,420.3 points, with the benchmark recording a weekly gain of 1.6%.

Reports showed that US drugmakers Merck and Pfizer's COVID-19 antiviral pills were effective against the variant, cheering investors ahead of an extended Christmas weekend in Australia. Markets in Australia and New Zealand will be closed till Tuesday and will resume trading on Wednesday.

"The latest studies suggesting reduced hospitalisations with the Omicron variant appear to have lowered virus anxiety, prompting the occurrence of the Santa rally," said Kunal Sawhney, CEO of Kalkine Group.

Meanwhile, Australian authorities said on Friday they would further shorten the interval for a booster shot to control the record surge in cases stoked by Omicron.

Among individual stocks and sectors, financials added 0.4%, with the top four banks rising between 0.1% and 0.6%.

AMP climbed 6.4% to be the top gainer on the subindex and the benchmark after announcing a sale of its infrastructure debt division to Ares Management for A$428 million ($310 million).

The energy sector rose 0.9%, extending gains for fourth session following an overnight rally in oil prices. Gas producer Santos Ltd added 2.2%, while oil refiner Viva Energy climbed 1.8%.

Miners jumped 0.5% as iron ore prices perked up, helping the index post a fifth straight weekly gain.

Iron ore major BHP Group rose 0.2%, while smaller rival Fortescue Metals Group added 0.4%.

Technology stocks reversed losses from Thursday to end higher, with Novonix Ltd and Afterpay Ltd being among top gainers. For the week, it added 3.5%.

In New Zealand, the benchmark S&P/NZX 50 index closed 0.2% higher at 12,888.4 points.