SYDNEY, AAP – Australian shares traded higher at midday with solid gains in financial and energy stocks as local investors shrugged off a surge in coronavirus cases on hopes the Omicron variant is less severe.

The benchmark S&P/ASX200 index was up 19.5 points, or 0.26 per cent, to 7384.3 points at 1200 AEDT on Thursday.

The All Ordinaries index rose 19.9 points, or 0.26 per cent, to 7702.5 points.

Sentiment was eased after a South African study indicated lower risks of hospitalisation and severe disease in people infected by the Omicron variant compared to Delta, although the World Health Organization has cautioned that it is too soon to draw a firm conclusion.

That allowed investors to ignore a surge in cases with NSW revealing a record 5715 infections while Victoria added 2005 infections, its highest in two months.

Traders also followed strong cues from Wall Street, where major indices recorded strong gains overnight after upbeat US economic data.

In the local market, financial stocks helped hold the line, with each of the Big Four banks trading in the green.

Magellan Financial Group also rebounded another 2.8 per cent to $20.49, with the fund manager continuing its gradual recovery after a slide last week following the loss of a major contract.

Energy shares also posted gains after oil prices rose nearly 2 per cent overnight amid easing worries about the likely hit to economic activity from the spread of the Omicron variant. Santos and Woodside were up more than 0.5 per cent each.

The big iron ore miners were in the red over concerns about steel production in China. Both BHP and Fortescue Metals Group were down around 1 per cent each.

However, this was more than made up by gains in gold explorers after the precious metal climbed further. Newcrest was up almost 1 per cent, while smaller rivals Regis Resources and Evolution Mining had gains of more than 3.0 per cent each.

Healthcare shares were also trading higher, led by a 3.5 per cent lift in Ansell to $31.73, while CSL edged 0.4 per cent higher to $291.73.

Among other stocks, Bega Cheese tumbled nearly 12 per cent to $4.95 after the company warned of a hit to its 2022 fiscal earnings. It attributed the profit warning to rising competition, high global prices and the impact of coronavirus.

Meanwhile, the Australian dollar was buying 72.13 US cents at 1200 AEDT, higher from 71.32 US cents at Wednesday’s close.