Australian shares have recovered some of Tuesday's losses due to a strong lead from the US.
However, IG market analyst Evan Lucas said the joy could be short-lived as investors continue to worry about the Chinese economy.
"Our market didn't pick up all of yesterday's losses, but at least there was a pick up," Mr Lucas said.
"It still does look like we're in a downward trend due to nervousness about China and the US earnings season."
Wall Street finished firmer after official data showed US retail sales rose by a stronger-than-expected 0.2 per cent in December.
"The banks have certainly picked up after yesterday and better than expected numbers out of US company Wells Fargo certainly helped the financial space as a whole," Mr Lucas said.
In the mining sector, heavyweight BHP Billiton lost ground, closing 21 cents, or 0.6 per cent, lower at $35.93.
"BHP continued to slide despite the fact that we got a good kick up from the US so that would suggest investors are still concerned about China," Mr Lucas said.
In the rest of the mining sector Oz Minerals shares rallied 14 per cent, or 43 cents, at $3.50, after the gold and copper miner said it had realised its production guidance and expects a boost in production and lower costs in 2014.
Rio Tinto closed 89 cents, or 1.4 per cent, higher at $64.24.
Meanwhile Fortescue shares jumped 18 cents, or 3.5 per cent, to $5.33 after it announced it had paid back $US1.6 billion ($A1.79 billion) of debt early lowering its total pile to below $US10 billion.
Gold miner Newcrest was among the weaker stocks, losing 27 cents, or 3.07 per cent, to $8.53 as the overall gold sector weakened.
Among the big four banks, the Commonwealth was up 39 cents at $76.19, ANZ had gained 18 cents to $30.97, Westpac had lifted 20 cents to $31.71 and NAB was 26 cents higher at $33.83.
Telco Telstra was two cents higher at $5.22.
- At the close on Wednesday, the benchmark S&P/ASX200 index was 33.4 points, or 0.64 per cent, higher at 5,245.4.
- The broader All Ordinaries index was up 35.7 points, or 0.68 per cent, at 5,255.5.
- The March share price index futures contract was 36 points higher at 5,210, with 21,301 contracts traded.
- National turnover was 1.3 billion securities worth $3.2 billion.