Australian stock market rallied nearly two per cent on Monday on stronger global cues, commodity market and metal prices.

At close, the Australian Stock Exchange benchmark index, S&P/ASX200, traded at 4,717.5, 1.77 per cent up from its previous close. The broader index, All Ordinaries index, climbed 1.64 per cent over its previous close to 4,732.7.

Mining giants, BHP Billiton and Rio Tinto remained the buzz of the day as the German Federal Cartel Office began a probe into the intended tie up between the two companies for iron ores. The authorities suspect that the $130 billion deal might just create a harmful impact on existing competition in the market.

Nevertheless, stocks of both companies rose over two per cent during the day's trade. While BHP Billiton rose 2.82 per cent to $42.16, Rio Tinto moved 2.12 per cent up to $72.51.

Among others, the four biggest banks in the country rallied over 2.5 per cent with the exception of National Australia Bank, which gained on 0.31 per cent to $25.33 during the day.

Seven Network remained one of the major companies to end in red on Monday. The company's stock lost 5.16 per cent of its value to close at $6.98 amid announcement by the company to merge with WesTrac Holdings Pty Ltd.