The Australian share market has surged more than 3.5 per cent higher in its biggest one-day hike since December 2008.

The market rose in early trade on signs European finance ministers will protect struggling banks.

This drove up the price of commodities such as oil and copper, which in turn had a positive affect on local resource stocks.

The Australian market was able to extend its earlier gains throughout Thursday.

The All Ordinaries index closed 140 points higher to 4,132 while the ASX 200 put on 3.65 per cent.

There were big gains among the resource and energy stocks with Rio Tinto adding 5 per cent and BHP Billiton adding 3.3 per cent.

Woodside Petroleum gained 4.7 per cent and Fortescue jumped by over 7 per cent.

Gains were also seen across the broader market.

Sorry, this audio has expired ASX posts best gain since December 2008 ( Michael Janda )

The big banks all finished higher, with NAB adding 5 per cent and ANZ just over 4.5 per cent.

It comes amid news former treasury secretary Ken Henry has been appointed to NAB's board.

Dr Henry will serve as a non-executive director on the bank's board from November.

He retired from Treasury earlier this year after 10 years in the job, and is still advising the Federal Government on economic issues.

Elsewhere Qantas put on more than 5 per cent, while among the retailers Myer added 1.9 per cent.

In the red

Austar was one of the few stocks to finish in the red, shedding 0.4 per cent.

It came a day after regulators extended a review of the pay-television operator's proposed takeover by Foxtel.

Iconic Australian brewer Fosters Group also lost ground, finishing just over 0.3 per cent lower.

On currency markets, the Australian dollar was buying 95.7 US cents as of 6:00pm (AEDT), 72.4 Euro cents, 74.2 Japanese yen, and 62.8 British pence.

In commodities, spot gold was worth $US1,648 an ounce.

West Texas Crude was higher at $US79.7 a barrel, but Tapis was lower at $US113 a barrel.