Australian shares have jumped to their highest in 50 days as market participants grew less concerned about the Omicron variant on returning from an extended holiday weekend.

The ASX 200 closed up 1.2 per cent to 7,510.

The top-performing stocks were Chalice Mining (+7.8pc) and Liontown Resources (+7.5pc), while Whitehaven Coal (-2.2pc) and Afterpay (-1.8pc) were the bottom movers.

Heavyweight financials rose as much as 1.1 per cent, with the so-called Big Four banks up between 0.8 per cent and 1.5 per cent in afternoon trading.

Commonwealth Bank of Australia advanced as much as 1.3 per cent, while Westpac jumped 1.5 per cent.

Miners rose 1 per cent, with Pilbara and Perenti Global jumping 7.1 per cent and 8.5 per cent, respectively.

Energy stocks rose 1.2 per cent after crude oil prices settled higher overnight, supported by supply outages and expectations that US inventories fell last week.

Major oil and gas explorer Santos added 0.3 per cent, while Woodside Petroleum rose as much as 2 per cent to its highest in nearly two weeks.

Healthcare stocks jumped as much as 0.6 per cent and were set for their sixth straight session of gains.

The Australian dollar was flat at 72.28 US cents.

A mixed session on Wall Street

The Dow Jones Industrial Average rose 0.3 per cent while the S&P 500 lost 0.1 per cent.

The Nasdaq Composite dropped 0.6 per cent.

Asset classes from oil to equities are near or above recent highs, having clawed back losses from late November, when the Omicron variant of COVID-19 sent investors scurrying for safety.

Delays in Britain and France on imposing more COVID curbs before the end of the year also excited investors.

MSCI's gauge of stocks across the globe gained 0.1 per cent as it continued to hover near a record high hit last month, and the pan-European STOXX 600 added 0.6 per cent to end the session at a five-week high, heading for its best month since March this year.

The markets were in line with the seasonal Santa Claus rally, with CFRA Research data showing the S&P 500 had on average risen 1.3 per cent in the last five trading days of the year and first two days of the new year since 1969.

"Investors are digesting the gains from the last three days … but there are concerns such as 'How will the Omicron variant affect the market? Would that end up undoing the Santa Claus rally? What about the Fed raising interest rates, could that cause challenges for the year ahead?'" said Sam Stovall, chief investment strategist at CFRA Research in New York.

"This is a holiday-shortened week. So daily movements will likely be exaggerated because of a low relative volume."

In Europe, the UK government said England would not get any new COVID-19 restrictions before the end of 2021, while the French government said it would tighten measures, though there will be no curfew for New Year's Eve and schools will reopen as planned in early January.

The MSCI world equities index is up more than 17 per cent so far this year, and heading into 2022 investors are wary of risks stemming from rising price pressures, slowing corporate earnings growth and the likelihood of a rate hike cycle in the US.

"Money growth will slow in 2022, but the market strongly doubts that the ECB and the Fed are willing to truly tighten financial conditions," said Arne Petimezas, analyst at AFS Group in Amsterdam.

Oil extended its gains despite the rapid spread of Omicron, supported by supply outages and expectations that US inventories fell last week.

Brent crude oil was flat, trading at $US78.98 a barrel in the afternoon.

ABC/Reuters