Despite the rally going into the Christmas break, the index was still down 0.5 percent for the week and the market remains 12.7 percent lower for the year.
"It's very nice to have a bit of green on the last trading day before Christmas. It's a very nice surprise given the poor performance yesterday," said Michael Heffernan, senior client adviser and strategist Austock Group.
Trading on the Australian Stock Exchange ended early at 2 pm local time (0300 GMT), ahead of the Christmas break, although corporate announcements will continue until 0530 GMT.
US stocks rose on Thursday on the back of a drop in weekly claims for jobless benefits to a 3-1/2-year low, while US consumer sentiment also hit its highest level in six months.
"We are being supported by a nice move up in US futures at the moment," said Chris Weston institutional dealer IG Markets.
"We obviously had a pretty dismal session yesterday, with the market closing below 4,100, but we have picked up the pace today," he added.
Shares in Gloucester Coal rose 21.6 percent, after China's Yanzhou Coal Mining Co Ltd said it plans to merge its Australian unit with Gloucester in a A$700 million deal.
Global miners BHP Billiton and Rio Tinto, and gold miner Newcrest all rose over 1 percent on the back strong commodities prices overnight.
The big four banks all performed well in the shortened trading session, with Australia and New Zealand Banking Group the best performer of the group up 1.5 percent.
Shares in Australia's largest phone company, Telstra Corp Ltd, rose 0.6 percent, hitting a one-year high.
Murchison Metals rose 9 percent after settling a Federal Court case by agreeing to pay Cameleon Mining A$25 million. Cameleon shares fell 3 percent.
The benchmark S&P/ASX 200 index rose 49.6 points to 4,140.4, according to latest available data. The benchmark fell 1.2 percent on Thursday.
"A lot of people were closing books for the year and I think people are just hoping next year is going to be a slightly better year," said Weston.
New Zealand's benchmark NZX 50 index rose 0.3 percent to 3,215.5, but ended off day highs after a series of earthquakes hit the city of Christchurch, causing damage.
The series of strong quakes sent goods toppling from shelves and caused rockfalls, ten months after a quake killed almost 200 people in the city.
Shares in Fletcher Building rose 0.2 percent, but were off the day's highs.