SYDNEY/WELLINGTON: Australian shares built on last week's rally, climbing 1.2 percent on Monday in a holiday-shortened week, led by gains in energy and mining companies after oil surged on Friday.
Activity was likely to be thin this week, with many investors away for Christmas and the run-up to New Year's holiday. By 0149 GMT, the S&P/ASX 200 index was up 62.95 points to 5,401.6 in light trade. The benchmark advanced 2.5 percent on Friday, the biggest one-day gain since July 2013.
Monday's gains also helped the index erase this year's losses. It is now up 0.83 percent year-to-date.
"We're seeing a positive lead coming from Wall Street, bounce in oil prices and energy stocks," said Leanne Jones, market analyst at Bell Direct.
On Wall Street on Friday, US shares rose after the Federal Reserve said it would be "patient" on raising benchmark US interest rates, giving rattled markets much needed relief "If we can continue seeing this Santa Clause rally continue then I suppose we'll finish the year on a positive note," Jones added.
Energy companies such as Liquified Natural Gas, Senex, Drillsearch and Horizon Oil were up 3-8 percent, among the best performers on the index.
The "Big Four" Commonwealth Bank of Australia, Westpac Banking Corp, ANZ Banking Group and National Australia Bank were up 0.6-0.9 percent.
Among large miners, BHP Billiton and Rio Tinto gained more than 2 percent.
Elsewhere, Transfield Services shares hit two-month lows after Spanish infrastructure group Ferrovial walked away from a sweetened A$1.03 billion offer for the Australian contract services firm.
Travel equipment retailer Kathmandu Holdings shares fell over 19 percent to its lowest level since July 2013. New Zealand's benchmark NZX50 index was little changed at 55,27.86 in early trade, as investors were cautious about pushing shares higher in quiet, year-end trading after the index hit a lifetime intraday high of 5,545.03 late last week.
The index is on track to end the year 16.7 percent higher, boosted by strong demand for a raft of domestic IPOs, while a buoyant economy has raised foreign interest in the island nation's shares.
New Zealand Oil and Gas rose 4.2 percent to NZ$0.625 after the exploration and production company said it had taken a near 20 percent in Cue Energy, an Australian counterpart.