The Australian share market has rallied in its best day since April 6 after the US Federal Reserve began purchasing corporate bonds, sending a flood of cash into global markets.

The S&P/ASX200 benchmark index jumped three per cent in the first eight minutes of trade and trended higher throughout the day only to fade slightly in the final minutes, closing up 222.5 points, or 3.89 per cent, to 5,942.3.

The All Ordinaries index finished 228.1 points, or 3.91 per cent, higher, at 6,058.1

The Australian dollar was higher as risk appetite returns.

It was buying 69.41 US cents, higher from 67.88 US cents at the close of trade on Monday.