The S&P/ASX200 gained 138.8 points on Friday, up 1.62 per cent to 8,731.7, as the broader All Ordinaries improved by 145.4 points, or 1.65 per cent, to 8,965.
The top-200 ended the week 0.86 per cent higher, wrapping up two straight months of modest gains but ultimately down more than five per cent since the Persian Gulf conflict began on February 28.
"Helped along by the reports of a peace deal nearing agreement, global share markets rose over the last week, albeit there were a few gyrations along the way as prospects for a deal looked questionable mid-week in the face of renewed US strikes on Iran," AMP chief economist Shane Oliver said.
"Of course, the deal could still collapse with Iran's tolling of ships through the Strait a potential sticking point and a cynic might say this just leaves us where things were before the war with no progress on Iran's nuclear ambitions, so it could all flare up again."
Miners led the charge in a strong closing session after a prospective US-Iran ceasefire extension softened oil prices and boosted investor sentiment following days of escalating attacks.
Energy and utilities stocks were the only sectors that finished Friday lower, as Brent crude dropped to six-week lows before hovering about $US91.50 a barrel by 5pm.
Raw materials stocks surged 2.9 per cent, the move supercharged by rebounding gold stocks as the precious metal pushed above $US4,518 ($A6,309) an ounce.
Mega-cap miners BHP and Fortescue also clocked gains of more than 2.4 per cent despite oversupply concerns and cooling steel demand from China weighing on iron ore futures.
Copper plays, mixed miners, battery minerals producers and rare earths stocks also rallied as investors adjusted their fuel price expectations.
The rosier outlook helped Qantas and Virgin Australia soar more than three and six per cent respectively, boosting the industrials sector by 1.5 per cent.
Financials jumped 1.2 per cent on Friday but still ended the week lower as persistent concerns about already lofty bank valuations, a cooling housing market and high interest rates continued to weigh on the segment.
Consumer cyclicals have rocketed more than four per cent higher since Monday, showing signs of a sustained rebound in their third straight week of gains.
Real estate stocks were also on the mend, up 2.4 per cent for the week and notching their highest Friday close since early March.
Shares in 4DMedical rocketed higher by almost a fifth after the medical technology company secured a new US contract.
Looking ahead, next week brings local GDP data for April, US jobs data and European inflation figures.
Supported by an upswing in risk sentiment, the Australian dollar is buying 71.64 US cents, up from 71.22 US cents on Thursday at 5pm.
ON THE ASX:
* The S&P/ASX200 gained 138.8 points, or 1.62 per cent, to 8,731.7
* The broader All Ordinaries rose 145.4 points, or 1.65 per cent, to 8,965
One Australian dollar trades for:
* 71.61 US cents, from 71.22 US cents at 5pm AEST on Thursday
* 114.01 Japanese yen, from 113.59 Japanese yen
* 61.45 euro cents, from 61.34 euro cents
* 53.28 British pence, from 53.13 British pence
* 120.16 NZ cents, from 120.95 NZ cents
