The Australian share market has rebounded from last week's plunge led by the banks after the federal  government guaranteed all bank deposits for the next three years.

At 14.40 pm AEDT the S&P/ASX200 it was up 139.6 points, to 4100.3.

At 1200 AEDT, the benchmark S&P/ASX200 was up 191.1 points, or 4.82 per cent, to 4153.8, while the broader All Ordinaries gained 178.3 points, or 4.53 per cent, to 4117.8.

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The December share price index futures contract rose 128 points to 4182, on a volume of 23,435 contracts.

Man Financial broker Anthony Anderson said the federal government's guarantee of bank deposits had boosted investor confidence.

“There is more confidence today and that is helping hold up the market," Mr Anderson said.

"The banks and in particular CBA are doing well."

Commonwealth Bank was up $2.46, or 6.22 per cent, to $42.01, National Australia Bank lifted $1.75, or 8.41 per cent, to $22.55, and ANZ Banking Group gained $1.30, or 8.5 per cent, to $16.60.

Westpac rose $1.57, or 7.78 per cent, to $21.76 and its takeover target St George Bank climbed $2.36, or 9.37 per cent, to $27.55.

In news today, banking and insurance group Suncorp-Metway Ltd says it is assessing whether to sell its banking and wealth management operations.

Suncorp shares firmed 27 cents, or 2.91 per cent, to $9.54.

On Friday, the Dow fell 128.00, or 1.49 per cent, to 8,451.19 while the Standard & Poor's 500 index fell 10.70 or 1.18 per cent, to 899.22.

The Nasdaq composite index rose 4.39, or 0.27 per cent, to 1,649.51.

Deposits guarantee boosts confidence

ABN Amro Morgans private client adviser Bill Bishop said the government's deposit guarantee had given the market a huge boost in confidence.

"They've demonstrated they're fair dinkum about this," Mr Bishop said.

"This is the first really solid move for the market to get its teeth into and it's a wonderful bounce to give people a bit of confidence."

Mr Bishop said the gain today was unlikely to be a full scale turnaround in direction.

But, "it makes a change to be able to talk about some good news".

Mining, energy sector also recover

Among the miners, BHP Billiton was up $1.90, or 6.85 per cent, to $29.63, while takeover target Rio Tinto climbed $4.31, or 5.9 per cent, to $77.31.

The local energy sector was mostly stronger, with Woodside Petroleum up 25 cents to $37.45, Santos gained 16 cents to $12.50 but Oil Search shed two cents $3.38.

At 1211 AEDT, spot gold was trading in Sydney at $US857.80 an ounce, down $US56.70 on Friday's close of $US914.50.

In local gold stocks, Newcrest Mining was steady at $25.64, Newmont Mining fell 27 cents, or 5.4 per cent, to $4.73, and Lihir Gold was 14 cents lower, or 5.62 per cent, at $2.35.

The retailers were higher. Woolworths climbed 96 cents to $25.96, David Jones was up four cents at $3.09, Harvey Norman rose six cents at $2.66, and Coles owner Wesfarmers gained 25 cents to $22.