There were no fresh drivers but the Australian sharemarket jumped to a fresh five-year high as investors scrambled for yield ahead of a US Federal Reserve policy meeting beginning tomorrow.
The S&P/ASX index gained 1.3 per cent at its peak but slipped to close 55 points, or 1.02 per cent, up at 5441.4 points as Chinese stocks again failed to follow the broader global equity market exuberance.
Expectations that the US Federal Reserve has lost the opportunity to taper its bond purchasing program for at least six months has led to a fresh global scramble for higher-yielding assets.
However, global credit markets continue to reflect a more cautious outlook with yields having retraced less then half the blowout this year while stocks hit multi-year highs.
Benchmark 10-year yields are trading at 2.52 per cent and face strong resistance, while Australian 10-years rose 2.5 points to 3.994 per cent.
On Friday data continued to reflect a loss of global growth momentum as US September durable good orders missed forecasts, consumer sentiment dived and Germany's key IFO business sentiment index also deteriorated.
Royal Bank of Scotland currency strategist Greg Gibbs said some fund managers have noted that the pullback in US yields from the 3 per cent level gave the Fed room to move in December while many others were conscious of the fact that tapering would remain a lingering concern overhanging sentiment.
The Australian dollar rose from its overnight low of US95.80 to US96.05Â¢.
The Shanghai composite index was off 0.2 per cent at the close of the ASX after weaker earnings reports offset the easing of interbank funding rates.
In Tokyo the Nikkei index jumped 1.6 per cent.
Gold was steady at $US1350 an ounce, copper slipped 0.2 per cent to $US7170 an ounce and on Friday spot iron ore eased 0.2 per cent to $US133.20 a tonne.
CommSec analyst Steven Daghlian said the one per cent gain was the ninth positive finish in 10 days.
"This is the best winning streak for 2013,” Mr Daghlian said.
"We’re seeing all time highs in a number of different areas, with three of the big four banks sitting at their best levels ever."
While NAB was not trading at record highs, it is still the best performing bank this year, he said.
Since the recent US debt ceiling agreement, global markets have been pushing higher as investors show more willingness to take risks in the absence of bad news.
Among the major banks, ANZ was up 58 cents at $33.24, National Australia Bank rose 60 cents to $36.68, Commonwealth Bank gained $1.12 at $77.40, and Westpac climbed 25 cents to $34.61.
National Australia Bank and ANZ release their full year results this week.
In the resources sector, BHP Billiton was up 44 cents at $37.85, and Fortescue Metals rose 21 cents to $5.42.Rio Tinto added 61 cents to $64.38 after it agreed to sell its majority stake in its Clermont coal mine, in central Queensland, for more than $1 billion.
In other company news Perth-based minerals explorer Greenland Minerals and Energy rose three cents, or 9.4 per cent, to 35 cents after Greenland’s parliament voted to remove a 25-year-old ban on uranium mining.
Ardent Leisure Group was three cents richer at $2.00 after a solid performance from its health clubs division helped boost first quarter revenue and earnings.
But Treasury Wine Estates lost four cents to $4.49 as shareholders moved to take legal action against the winemaker over write-downs related to excess stock in the United States.
The broader All Ordinaries index was up 51.6 points, or 0.96 per cent, at 5,437.3.
The December share price index futures contract was 45 points higher at 5,430, with 24,264 contracts traded.National turnover was 1.7 billion securities worth $4.9 billion.