Increasing optimism around the outcome of a European Central Bank meeting later this week has boosted the Australian share market.
The All Ordinaries index had picked up 0.8 per cent to 4,268, and the ASX 200 was up 39 points to 4,248 by 2:07pm (AEST).
Over the weekend, Italian prime minister Mario Monti and German chancellor Angela Merkel issued a joint statement saying they would "do everything necessary to protect the euro area."
That came on top of comments by the ECB's president Mario Draghi last week that the bank would do "whatever it takes" within its mandate to save the euro.
That has been interpreted by many on financial markets as a signal that the ECB will buy Spanish bonds to push down that country's borrowing costs, which have already fallen from well above 7.5 per cent to below 6.7 per cent since Mr Draghi's speech.
The ECB's intentions will be revealed on Thursday after its governing council meets in Frankfurt.
There is also increasing speculation that the US Federal Reserve will effectively print more money through another round of quantitative easing, with many analysts expecting such a stimulus move around September after a run of disappointing economic data.
The banking sector has gained strongly on hopes of increased European financial stability: the Commonwealth Bank was leading the way with a 2.6 per cent rise, but the other majors were all up by well over 1 per cent.
Australia's two major global miners gave up some stronger early gains, with Rio Tinto up 0.5 per cent at $52.26 and BHP Billiton up 19 cents to $31.61.
Today's gains back up a 1.5 per cent rise for the Australian market on Friday.
However, as has been the trend recently, the volume of shares being traded has been relatively low.
CMC Markets chief market strategist Michael McCarthy says the northern summer typically brings a lower level of activity on global financial markets.
He says it usually also means less volatility in financial markets, but even the London Olympics do not seem to be enough to distract shaky investors.
"Certainly in the northern hemisphere summer we generally see lower volumes in the market and often it leads to lower volatility as well," Mr McCarthy observed.
"I suspect a lot of people in Europe are very disappointed they're not able to enjoy their summer this year, or to get to the Olympics, and I suspect for markets it will be business as usual despite the global sporting fest."
The Australian dollar has also benefitted against the greenback, climbing as high as 104.97 US cents early this morning, before settling to trade around 104.6 US cents.
However, Michael McCarthy expects the currency's current levels to be its high-water mark.
"It's interesting to note in an article this morning that the reported range of analysts' forecasts for the Australian dollar are between 90 [cents] against the US and $US1.10, and that's a very wide range, expressing the uncertainty in currency markets at the moment," he said.
"I suspect that we're near the top of our near-term trading range against the US dollar at $US1.05."
Spot gold was around $US1,623 an ounce.