The Australian sharemarket was higher mid-session, led by the industrial sector and continuing hopes for a European bailout.

At 10.00am, the benchmark S&P/ASX200 index was up 15.7 points, or 0.38 per cent, at 4139.6, while the broader All Ordinaries index was up 14.7 points, or 0.35 per cent, at 4166.1.

On the ASX 24, the September share price index futures contract was up 16 points at 4098, with 14,141 contracts traded.

Bell Direct equities analyst Julia Lee said the market was performing better than expected with gains led by the banks.

The banks were stronger with Westpac up 16 cents to $22.61, ANZ gaining four cents to $22.66, Commonwealth Bank up 21.5 cents to $55.07, while National Australia Bank softened half a cent to $23.81.

"Bank yields are still quite attractive, so we're seeing a search for (those) yields," Ms Lee said.

"The industrials have been underperforming this week, so it's good to see them leading the gain."

Ms Lee said the local market will continue to be tested in the face of ongoing European debt woes.

"The market is just moving on headlines coming out of Europe.

"The worse things seem to get in Europe, the greater the expectations of a bailout from the European Central Bank.

"(The possibility) for a circuit-breaker coming through from the ECB has given hope to overnight markets."

Among resource stocks, the mining giants continued mixed trading with BHP Billiton gaining five cents to $30.90 while Rio Tinto lost 27 cents to $50.74.

Fortescue Metals Group was down seven cents to $4.03, while troubled miner Energy Resources of Australia (ERA) lost two cents to $1.45 after recording a first half net loss and heralding the uranium market would continue to be challenging.

In equities news, shares in Qantas Airways soared around seven per cent to $1.06 following reports that the national carrier is set to establish an alliance with the world's largest international airline, Dubai-based Emirates.

Investors welcomed Caltex Australia's announcement that around 330 jobs would go as it closes its Kurnell refinery in a supply chain restructure, by pushing its shares up 24 cents to $14.30.

Gold miner Newcrest Mining continued to climb, up 86.5 cents at $23.01 after announcing it had exceeded its 2012 financial year copper production targets and had met its gold production forecast.

Among retailers, Wesfarmers was flat, down a cent to $31.97 after reporting mixed sales at its retailers - with sales at its Coles supermarket division rising, but sales at retail chain Target dropping 1.8 per cent and those at Kmart unchanged.

At 10.37am, national turnover was 607 million securities worth $1.49 billion, with 363 stocks up, 334 down and 285 unchanged.

The West Australian

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