Frantic buying pushed Australian shares up 2.8 per cent in early trading Wednesday as investors took their lead from late gains on the US market overnight.

The ASX 200 index gained 113 points, or 2.8 per cent, as a rally begun in late trading Tuesday powered on.

The Dow Jones Industrial Average index finished up 4 per cent on Tuesday in the United States, ending the rout which followed the downgrading of the U.S. long-term debt’s rating on Friday.

Tuesday saw stocks stage their most impressive turnaround in 35 years, recouping 55 billion Australian dollars (56 billion US dollars) in value in the second half of the session.

The Australian dollar continued to recover, trading at 1.0362 to the US dollar compared with 1.0158 at the close on Tuesday.

More In: Markets | Business