Australian shares posted their strongest weekly advance in more than two months, ignoring selling pressure in the materials sector, a slumping oil price and a widespread distaste for technology stocks on Wall Street. 

Healthcare stocks were the best performing over the shortened week, followed closely by real estate companies and consumer discretionary plays. 

The benchmark S&P/ASX 200 index and the broader All Ordinaries each rose 0.2 per cent on Friday and 1.7 per cent and 1.6 per cent over the week to 5774 points and 5808.2 points respectively.

A sinking iron ore price depressed the mining sector and a weaker oil price weighed on energy stocks, though not as much as perhaps was expected. 

"The bargain hunters have stepped into the banks this week, bringing them back from oversold levels," said Romano Sala Tenna, portfolio manager at Katana Asset Management. 

"And while there was a selloff in oil, key oil stocks in Australia held up quite well. People are looking through the dip and think there's a better price ahead."

BHP Billiton slumped 2.3 per cent over the week, though new pick as chairman, Ken MacKenzie, got the nod of approval from Elliot Associates, the activist investor firm that has taken a holding in the company and is lobbying for a restructure.

Australia's largest oil refiner Caltex managed to climb 1.4 per cent over the week, while those at the mercy of iron ore, namely Rio Tinto and Fortescue Metals, closed down 4.5 per cent and 3.3 per cent over the week respectively. 

The bank levy launched in the federal budget last month took its toll on bank shares these last few weeks, but the selling seems to have abated. CBA finished the week 3.4 per cent higher, Westpac was up 1.9 per cent, NAB climbed 1.5 per cent, while ANZ was off 0.9 per cent. 

The price of gold dropped lower after the US Federal Reserve raised interest rates this week, a nod to the recovery in the US economy. The price of bullion was $US1253.9 an ounce on Friday afternoon and the likes of Newcrest Mining and OceanaGold closing down 2.1 per cent and 11.9 per cent respectively for the week. 

In other equities news, Mineral Resources slumped 5 per cent on Friday after an incredible rally at the start of the week thanks to Deutsche Bank announcing a "buy" rating on the stock with a $12 price target. That said, the stock finished the week up 2.9 per cent.