Australian shares ticked higher on Monday, lifted by mining and energy stocks on strong commodity prices, with a mixed US jobs data report last week raising investor hopes the Federal Reserve could adopt a less aggressive tightening path going forward.

The ASX 200 closed up 41 points, or 0.6 per cent, to 6,934.

By 4:44pm AEDT, the Australian dollar was down at 64.38 US cents.

Mining stocks gained 4.1 per cent on a rise in iron ore prices, as hopes of China reopening from stringent COVID-19 curbs persisted.

Index majors Rio Tinto, BHP and Fortescue all rose between 3.8 per cent and 5 per cent.

Shares of miner Coronado Global Resources fell as much as 7.1 per cent, after it ended talks with Peabody Energy for a potential merger.

Local energy stocks also jumped 1.4 per cent after oil prices extended gains on Friday.

Santos and Woodside Energy gained 2.6 per cent while Santos dropped 0.1 per cent.

Medibank in an update on its cyber attack said it would not pay a ransom to hackers responsible for theft of about 9.7 million customers' data. Medibank shares were up 0.4 per cent.

Financials fell 1.4 per cent, with Westpac down 3.9 per cent after it reported a lower annual profit.

Westpac sees profit drop on charge, raises cost target

Westpac on Monday reported a drop in annual earnings, hit by a charge on the sale of its life insurance unit, and raised cost guidance as it flagged lower home prices and higher unemployment into 2023.

The bank revised its target for costs incurred to $8.6 billion by fiscal 2024 from a prior target of $8 billion, citing wage increases from a tight labour market and continued regulatory costs.

Westpac's cost target excludes its specialist business and some other items. Analysts at Citi said this implies a total cost base of $9.2 billion for fiscal year 2024, which consensus estimates have already priced in.

"This provides a clear point of differentiation from recent peer results, where revenue upgrades were mitigated by cost revisions," analysts at Citi said.

However, Westpac has seen a 19 per cent reduction in annual operating expenses during its 2022 fiscal year, benefiting from lower asset writedowns and staff expenses.

The bank's cash earnings came in 1.4 per cent lower at $5.28 billion for the year ended September 30, marginally beating a Morgan Stanley estimate of $5.23 billion.

It declared a final dividend of 64 Australian cents per share.

World equities rally 

Global shares rose on Friday and the US dollar fell, after jobs data came in stronger than expected but also hinted at some slack in the tight American labour market, raising hopes the Federal Reserve might ease up on monetary tightening.

Data from the US Bureau of Labor Statistics showed the economy generated 261,000 jobs in October.

That was higher than an estimated 200,000, according to a Reuters poll of economists, but it also showed unemployment rising, to 3.7 per cent from 3.5 per cent, in September while wage inflation dropped, to 4.7 per cent from 5 per cent in the prior month.

"We definitely are seeing some early signs of pricing pressure coming down," said Tom Plumb, portfolio manager at Plumb Balanced Fund in Madison, Wisconsin.

The MSCI index of global shares — which tracks equities in 50 countries — broke two straight days of losses and was up 1.7 per cent.

European stocks also rallied 1.8 per cent, a day after falling on rate hikes from the Bank of England and the Fed.

Wall Street's three major stock indexes closed higher, driven by technology, financials, consumer discretionary, communication services and industrials.

The Dow Jones Industrial Average rose 1.26 per cent, to 32,403.22, the S&P 500 gained 1.36 per cent, to 3,770.55, and the Nasdaq Composite added 1.28 per cent, to 10,475.25.

"Even though the Fed would not talk about a pivot or anything like that, I think the market is expecting them to remain data-dependent and, in the next six months, you're going to see significant cracks in the pricing pressure," Mr Plumb said.

The US dollar slumped after the employment report. The dollar index fell 1.90 per cent, while the euro was up 2.1 per cent, to $US0.9956.

Safe-haven gold jumped more than 2 per cent as the dollar fell.

Spot gold added 3.1 per cent, to $1,680.33 an ounce.

Oil prices rose by 5 per cent on Friday amid the looming European Union ban on Russian oil and as investors weighed the implications of China's easing of COVID-19 restrictions.

Brent crude futures settled up 5 per cent, at $98.57 a barrel.

ABC/Reuters