SYDNEY (AFP) -- Australian share prices closed 0.39 percent higher as investors bought banking stocks, while resources were mixed after poor commodity prices, dealers said.

They said buying leaned towards defensive stocks such as banks, and Qantas sank from Wednesday's giddy heights, while talk of takeovers boosted other potential buyout targets.

The benchmark SP/ASX 200 rose 21.2 points to close at 5,466.9, while the broader All Ordinaries Index gained 18.8 points to 5,441.6.

Turnover was 1.70 billion shares worth 5.73 billion dollars (4.44 billion U.S.), with 662 stocks up, 499 down and 344 steady.

"The Qantas situation has come back down to earth, not with a crash but with the sensibility of the success of the potential buyout being been questioned. It does look a bit hard," Bell Potter private client advisor Stuart Smith said.

He said other private equity takeover targets such as Foster's, CSR and Coles Myer gained ground on heightened investor speculation.

Radio station operator Austereo Group rose 0.04 dollars to finish at 2.15 after signing an online content and technology sharing agreement with John Fairfax Holdings, whose shares stayed at 5.15.

Allco Finance soared following an announcement it was considering participating in the 10 billion dollar bid for Qantas Airways proposed by Macquarie Bank and U.S. private equity firm Texas Pacific Group.

Allco shares surged 0.70 or 6.78 percent to 11.02 while Macquarie Bank shed 0.60 to 73.40.

Flag carrier Qantas fell 0.07 to 4.93 on profit taking after reaching a record 5.25 on Wednesday.

Foster's shares climbed 0.27 or 4.13 percent to close at 6.80 and Lion Nathan gained 0.04 to 8.11.

National Australia Bank shares rose 0.48 to close at 38.89, Commonwealth Bank advanced 0.47 to 48.12, Westpac was also up 0.47 at 24.49 and ANZ climbed 0.20 to 28.25.

Despite good trading volume, telecoms giant Telstra retreated 0.03 to 3.69, its T3 instalment receipts shed 0.05 to 2.25 and Optus-owner SingTel eased 0.01 to 2.46.

BHP Billiton was down 0.08 at 26.35 while Rio Tinto added 0.01 to 74.45.

Among the miners, Zinifex jumped 0.37 to 16.54 while Iluka was steady at 7.00 and Alumina slipped 0.05 to 6.37.

Newcrest climbed 0.51 to 23.75, Oxiana was unchanged at 3.18 but Lihir Gold eased 0.04 to 2.82.