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MELBOURNE, Dec 19 AAP

December 19 2012, 12:30AM

The Australian market was trading at its highest levels for the year at noon, with investors buoyant about the prospects of a resolution in the US to avoid falling off the fiscal cliff.

At 1220 AEDT on Wednesday the benchmark S&P/ASX200 index was up 20.7 points, or 0.45 per cent, at 4,615.9 points, while the broader All Ordinaries index was also up 20.7 points, or 0.46 per cent, at 4,631.5 points.

On the ASX 24, the December share price index futures contract was 15 points higher at 4,617 points, with 83,597 contracts traded.

US markets provided positive leads overnight where on Wall Street, the Dow Jones Industrial Average gained 115.73 points (0.87 per cent) to close at 13,351.12.

That was related to Republicans and Democrat politicians appearing to move closer to middle ground on fiscal cliff discussions, CMC Markets senior trader Tim Waterer told AAP.

"Traders are maintaining a festive mood that has been on display for much of December and that has propelled our market to fresh 2012 highs this morning so far," he said.

Mining stocks were making gains after the iron ore price continued to rise, with Rio Tinto 64 cents better at $65.34, BHP Billiton jumping 24.5 cents to $36.90 and Fortescue 1.5 cents to $4.615.

Troubled retailer Billabong downgraded its earnings guidance and announced it would consider a $527 million takeover bid. Its shares resumed trading after being in a halt for two days and had dived 10 cents, or 10 per cent, to 88 cents.

Whitehaven Coal shares added 17 cents to $3.38 after it said it had held talks with China's largest coal company, Shenhua Group, but no offers were currently on the table.

Most sectors were up with gold an exception following a 27.4 US cent fall overnight.

Gold stocks were 1.8 per cent weaker, led by the nation's largest gold company Newcrest Mining, which were 50 cents, or 2.15 per cent, weaker at $22.78.

National turnover was 638 million securities worth $1.55 billion, with 444 stocks trading up, 304 down and 341 unchanged.