Market sentiment lifted on news that a four month funding deal for Greece had been agreed.
The Dow rose 0.9% and the S&P 500 and the Nasdaq gained 0.6%, with the S&P 500 reaching a fresh record high.
US bonds finished the session little changed despite the news on Greece.
The Aussie dollar rose to a two-week high of 0.7849 US dollars, with an improvement in risk appetites supporting the local currency.
The Australian dollar trade weighted index was also trading higher.
The Euro gained versus the US dollar on news of a funding deal for Greece, with EUR/USD peaking at 1.1430, although the Euro softened against the Aussie dollar.
AUD/NZD continued to climb from the record low reached last week.
The copper price weakened on news of rising stockpiles. The gold price fell after Greece's bailout extension weighed on safe-haven demand for the precious metal.
There was no major economic data released in Australia on Friday.
The Eurozone composite PMI rose from 52.6 in January to 53.5 in February, a bit stronger than the 53.0 median estimate.
This is the highest reading since July and somewhat encouraging given the renewed concerns about Greece's membership of the Eurozone.
However, the readings are consistent with only modest economic and employment growth. The country breakdown showed Germany continuing to outperform, and France reaching a 4-year high.
Greece's funding issues were temporarily addressed. Eurozone Finance Ministers reached a "tentative agreement" on Friday to extend loans by four months, conditional on a series of as yet unknown measures.
Greece must submit a list of these policy measures by day's end Monday.
The Eurogroup, the ECB, and the IMF must decide whether they go far enough.
According to the Eurogroup statement this will, "provide a first view whether this is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review. This list will be further specified and then agreed with the institutions by the end of April."
The tail risk of a Greek exit from the euro has now been removed, but only for the time being.
The four month extension gets Greece past loan repayments to the IMF in the next couple months but stops just ahead of EUR7bn in bond maturities due July and August (mostly owned by the ECB).
Russia was downgraded from Baa3 to Ba1 by Moody's, with the outlook negative.
The cut to junk status follows the rating move by S&P, and is based on the continuing crisis in the Ukraine and the recent oil price and exchange rate shocks which are expected to further undermine the economy.
Also, "the government's financial strength will diminish materially as a result of fiscal pressures and the continued erosion of Russia's FX reserves".
The Markit/JMMA manufacturing index fell from 52.2 in January to 51.5 in February. It is the lowest reading since July 2014.
The reading is above 50, so in spite of the fall, it still indicates an expansion in the manufacturing industry.
The Markit US manufacturing PMI was higher than consensus expectations, rising to 54.3 in February, from 53.9 in January.
It was the highest reading since November 2014 and indicates that US manufacturing activity expanded at a more rapid pace in February.
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