THE Australian dollar closed more than a cent higher on the back of local sharemarket gains.

At 5pm AEST, the Australian dollar was trading at $US0.8236/38, up 1.35 per cent from yesterday's close of $US0.8126/30.

Since 7am AEST, the local unit traded between $US0.8188 and $US0.8305.

Easy Forex senior dealer Francisco Solar said the local unit traded in a relatively tight range considering the recent volatility on currency markets.

"It threatened to go below 82 US cents earlier today but it was quickly bought back up past US 82 cents," he said.

"It's just looking for some direction with negative sentiment around this week."

Mr Solar said the Australian dollar lost ground in morning trade after global miner Rio Tinto Ltd said the outlook for iron ore remains positive despite some caution about the near-term global economic outlook.

"We had a bit of a regain into positive territory, but we haven't even come close to making up the losses that we've seen of late, so we're still trading at the lower end of the range," he said.

Meanwhile, the Australian share market closed almost one per cent higher after shrugging off worries over Europe's deepening debt crisis, taking its lead instead from a recovery on Wall Street.

The benchmark S&P/ASX200 index closed up 41.9 points, or 0.98 per cent, at 4307.2 points and the broader All Ordinaries index gained 44.1 points, or 1.03 per cent, to 4,330.4 points.

On the Sydney Futures Exchange at 4.44pm AEST, the June share price index contract was 26 points higher at 4,300 on a volume of 46,559 contracts.

Burrell Stockbroking director Richard Herring said the US market recovery spurred growth in the Australian market despite continuing volatility in Europe.

"A good recovery in the US markets last night, which has given us renewed confidence today after a pretty damaging session yesterday," he said.

"Sector wise, BHP is contributing pretty well to the index ... banks have been in the positive but not to the extent we saw in the US market."

Mining giant BHP Billiton closed 98 cents higher at $37.26 and Rio Tinto rose $2.25, or 3.65 per cent, to $63.95, after it said the proposed resources super profits tax (RSPT) could take it longer to evaluate the viability of projects.
Fortescue Metals Group rose 34 cents, or 9.88 per cent, to $3.78.

Among the banks, Commonwealth Bank rose 47 cents, or 0.93 per cent, to $50.78 and Westpac fell 28 cents, or 1.26 per cent, to $21.98.

ANZ closed up 53 cents, or 2.48 per cent, at $21.87 and National Australia Bank fell 11 cents, or 0.46 per cent, to $23.65.

The closing spot price of gold in Sydney was at $US1,205.53 per fine ounce, up $US18.18 from Tuesday's closing price of $US1,187.35.

In other news, Brewer Foster's Group rose 38 cents, or 7.38 per cent, to $5.53, after it said it would create separate stock exchange listings for its beer arm and wine business.

Mineral Resources dropped five cents, or 0.74 per cent, to $6.67 after it lifted its stake in takeover target Mesa Minerals.

Minerals processing equipment provider Ludowici rose two cents to $2.75 after reporting that operating performance for the year to date had beaten its expectations but that the RSPT could affect second half results.

Tabcorp Holdings was down 16 cents, or 2.41 per cent, to $6.47, and said it had no knowledge of reports of a mooted takeover bid for the company.

Minerals testing company Ammtec was steady at $3.22 after it dismissed a takeover offer by Campbell Brothers as too low.

Communications provider Norfolk Group rose 11 cents, or 15.28 per cent, to 83 cents after it reported annual profit up almost 300 per cent.

Padbury Mining was the most traded stock by volume, with 83.42 million shares changing hands for $1.31 million.
Its stock rose 0.6 of a cent, or 54.55 per cent, to 1.7 cents.

Preliminary national turnover was 2.4 billion shares worth $7.5 billion, with 535 stocks up, 534 down, and 340 unchanged.