The S&P/ASX200 jumped 138 points by midday on Thursday, to be up 1.62 per cent at 8,634.6, as the broader All Ordinaries gained 140.1 points, or 1.61 per cent, to 8,857.1.
"The story itself looked a bit like a rinse-and-repeat job: a reassurance by US President Donald Trump – the cynics would say in a bid to jawbone oil and equity prices – that the US and Iran are in the 'final stages' of negotiations," Capital.com senior market analyst Kyle Rodda said.
A higher-than-expected April unemployment rate of 4.5 per cent gave the local indices an extra boost, because the outcome improves the odds the Reserve Bank will hold the cash rate steady in June, rather than hike for a fourth straight time.
Eight of 11 local sectors were in the green by lunchtime, while energy stocks and utilities tracked lower as Brent oil slipped to $US105 a barrel.
Santos and Woodside, along with refinery operators Ampol and Viva Energy, lost ground, while uranium producers reversed some recent losses.
Miners and banks bounced convincingly from recent selling pressure, with materials and financials up 2.9 per cent and 1.5 per cent, respectively.
BHP and Rio Tinto led the charge, soaring roughly three per cent as iron ore and copper futures improved.
Gold miners recovered as the precious metal surged to $US4,560 ($A6,400) an ounce, while battery minerals and rare earths producers mostly advanced.
Northern Star missed out, falling two per cent after announcing managing director Stuart Tonkin will depart next financial year.
Arafura Rare Earths eased 0.8 per cent to 29.3 cents, reversing an early rally after green-lighting its flagship, Australian-first, ore-to-oxide Nolans Project in the NT.
In financials, each of the big four banks, along with Macquarie, made gains, while insurers were flat-to-negative.
Industrials made a strong comeback, as Qantas and Virgin Australia soared 3.9 per cent and 8.2 per cent, respectively, on hopes of easing air travel disruptions.
Real estate stocks charged almost three per cent higher, boosted by improving market sentiment and a tweak in interest rate expectations.
In company news, piercing chain Skinkandy made its ASX debut at 12.30pm, jumping 3.6 per cent in its first minute of trade to $2.28 on an early volume of 106,000 shares traded.
Australia's Agriculture Company shares gained 1.5 per cent after the cattle group posted a record full-year operating profit, bolstered by strong beef sales.
Zip Co shares jumped 3.8 per cent after winning the right to keep using its name after reaching a settlement with Firstmac.
Improving risk sentiment lifted the Australian dollar overnight, but those gains disappeared shortly after the surprise unemployment figures, the Aussie buying 71.19 US cents, down from 71.41 US cents on Wednesday at 5pm.
