The Australian share market has closed higher, snapping a two-day losing streak after global markets posted strong gains overnight.

The benchmark S&P/ASX200 index was 38.3 points, or 0.78 per cent, stronger at 4,921, while the broader All Ordinaries index was down 37.9 points, or 0.77 per cent, at 4,940.5.

On Wall Street on Tuesday, the Dow Jones Industrial Average lifted 99.22 points, or 0.7 per cent, to 13,979.30 points, following data showing the US services sector continued to expand in January.

Figures released in Australia today showed that retail spending had fallen for three consecutive months, a sign that rising unemployment was weighing on consumer confidence. Retail trade was down 0.2 per cent in December, well below expectations of 0.3 per cent rise for the month.

‘‘I think we’ve basically followed on from the sentiment in the US,’’ CMC Markets chief market analyst Ric Spooner said. ‘‘Retail sales figures here (in Australia) were weak, but in a phase where the market wants to be optimistic I think that’s being parlayed into optimism on the increasing prospect of a rate cut.’’

The dollar plunged nearly half a cent on the weak retail sales to its lowest this year and was recently buying $US1.347.

On the local market, among the major banks, the National Australia Bank advanced 32 cents to $28.11, Westpac climbed 21 cents to $28.13, ANZ gained 39 cents at $27.03, and Commonwealth Bank lifted 33 cents to $64.63.

In the resources sector, global miner BHP Billiton firmed 34 cents at $37.52 as it met with workers in Adelaide to announce that some of them would lose their jobs as part of efforts to slash costs. Rio Tinto picked up 75 cents at $68.08.

Among other stocks, medical centre owner Primary Health Care was steady at $4.49 as it lifted its first-half profit by 50 per cent and forecast a rise in full-year earnings of up to eight per cent.

Gold miners Silver Lake Resources plumbed 2.5 per cent and Lynas Corp tumbled 3.2 per cent.

Food retailers rallied, Woolworths surged 2.7 per cent while Wesfarmers jumped 1 per cent.

Defensives were mostly firmer as blood products maker CSL surged 2.1 per cent and utility Origin Energy edged up 0.3 per cent. But Telstra bucked the trend, losing 0.9 per cent.

Online real estate advertiser REA Group was 71 cents richer at $21.71 after it lifted its first half profit by 25 per cent.

Streetwear company Globe International was untraded at 45 cents as its directors were re-elected at a board spill meeting in Melbourne.

Preliminary national turnover was 2.03 billion securities worth $4.23 billion, with 549 shares up, 417 down and 342 unchanged.

AAP with Reuters