The Australian market staged a big rebound on Tuesday morning, as investors put aside their concerns about the Omicron coronavirus variant and its economic impact.

But investors turned cautious again in afternoon trade, with the ASX 200 closing 0.2 per cent higher at 7,256 points, not far off from its seven-week low.

The benchmark index had jumped by as much as 1.3 per cent at its highest point, before the momentum fizzled out.

Some of the best performing stocks were Credit Corp (+8.6pc), Orocobre (+7.9pc), and Uniti Group (+7.8pc). Travel stocks made a strong recovery, led by Webjet (+5.2pc) and Flight Centre (+4.5pc).

Collins Foods' share price jumped 12.6 per cent, and was today's best performer as its Europe business recovered to their pre-pandemic strength. The company, which owns a large network of KFC franchises, announced that its European revenue jumped 31.7 per cent to $84.7 million.

Westpac's share price initially jumped after the corporate regulator ASIC filed six civil penalty lawsuits against it for "widespread" compliance failures. But in afternoon trade, it started to fall, and ultimately closed 1.9 per cent lower.

Meanwhile, the nation's banking regulator APRA published a set of rules requiring banks to hold more capital against investor and interest-only home loans but less for business loans, which is expected to affect loan pricing.

Shares of St Barbara (-4.3pc), Perseus Mining (-4.1pc), Bega Cheese (-2.8pc), Cochlear (-3.9pc), and Fortescue Metals (-3.4pc) experienced steep falls.

Investors await more detail on Omicron

The Australian dollar was slightly weaker at 71.1 US cents (after a 0.4 per cent drop).

The local currency "remains vulnerable to more downside in our view while Omicron uncertainty remains", Commonwealth Bank currency strategist Kim Mundy said.

"Any evidence that current vaccines are less effective against Omicron can push the Australian dollar towards 70 US cents."

Overseas stocks rallied, oil prices bounced and gold lost ground as markets latched onto hopes the new variant of concern would prove milder than initially feared.

News of the variant triggered alarm and a sell-off on Friday that wiped roughly $2.8 trillion off the value of global stocks, as countries slapped on new restrictions for fear the variant could resist vaccinations and up-end a nascent economic reopening after a two-year global pandemic.

The World Health Organization said on Monday the variant posed a very high risk of causing a surge in infections.

"We're all still reaching around in the dark and will need more data, but things do seem a bit more hopeful than they were on Friday," BlueBay Asset Management chief investment officer Mark Dowding said.

Bargain hunting in tech sector

Wall Street's main indices ended their day higher. The Dow Jones Industrial Average gained rose 0.7 per cent to 35,136 points.

The S&P 500 had gained 1.3 per cent to 4,655 and the Nasdaq Composite had added 1.9 per cent to 15,783.

Bargain buying in technology stocks drove the S&P and Nasdaq sharply higher, indicating investors were likely favouring stocks regarded as pandemic resistant.

"People are looking at it as a little bit of a sale on Friday and an opportunity to get into some areas of the market that got hit hard," Robert Pavlik, senior portfolio manager at Dakota Wealth Management, said.

The pan-European STOXX 600 index rose 1.2 per cent and MSCI's gauge of stocks across the world gained 0.4 per cent.

Oil prices rallied more than 5 per cent on Monday. But that was after they plunged more than 10 per cent last Friday in their biggest one-day drop since April 2020.

The international oil benchmark, Brent crude futures, lifted back to $US72.85 a barrel overnight after posting five straight weeks of losses.

Speculation that oil-producing group OPEC+ (which includes Russia, Saudi Arabia and other nations) might pause an output increase in response to the spread of Omicron aided the oil price rebound.

Spot gold slipped 0.5 per cent to $US1,782.56 an ounce.

ABC/Reuters