Australian shares closed higher on Friday, but posted their fourth straight weekly fall as worries over the new Omicron coronavirus variant and its possible economic impact weighed on investor sentiment.

The S&P/ASX 200 index rose 0.22% to 7,241.2, but ended the week 0.5% lower.

Australia reported its first community transmission of the Omicron variant, but authorities held steady on a plan to reopen the economy amid hopes it would prove to be milder than previous strains.

"Markets are more likely to remain jittery until investors obtain more information on how contagious the new COVID-19 variant is and how well existing vaccines can hold up against it," said Kunal Sawhney, chief executive officer of Kalkine Group.

"Investors are also assessing if the ongoing concerns around the new variant will hamper the Santa Claus rally this year."

Energy stocks lifted the local bourse on Friday, climbing 1.69% as oil prices extended gains after OPEC+ said it would review supply additions ahead of its next scheduled meeting if the Omicron variant hits demand.

Australian shares mark 2-month closing low on Omicron fears

Sector heavyweight Washington H Soul Pattinson and Company led gains on the sub-index, advancing 3.8% in its best session in more than two months, followed by Oil Search , which rose 3.7?%.

Financials added 0.97%, with all the "Big Four" banks advancing between 0.7% and 1.3%. Commonwealth Bank of Australia and National Australia Bank, the country's top two lenders, gained more than 1% each.

Meanwhile, TPG Telecom fell 8.8% in its worst session in more than eight months and was the biggest loser on the local bourse after Chairman David Teoh cut his stake in the telecom giant.

New Zealand's benchmark S&P/NZX 50 index inched 0.05% higher to finish the session at 12,676.5.