THE Australian share market has hit its highest level in 10 years as gains by the major banks outweigh a sharp drop for Telstra following its announcement of a major restructure.

The benchmark S&P/ASX200 index was up 0.7 per cent at 6,143.4 points at 1200 AEST on Wednesday, after hitting its highest level since January 2008 in morning trade.

The broader All Ordinaries index has also hit a 10-year high, and was up 0.6 per cent at 6,247.9 points at 1200 AEST.

The gains defy a weak lead from overseas markets, and a drop in commodity prices, after US President Donald Trump threatened to impose tariffs on another $US200 billion ($A271 billion) of Chinese goods, which prompted a warning of retaliation from Beijing.

The big four banks are leading the gains, with Westpac up 2.3 per cent at $28.64, ANZ up 2.2 per cent at $27.565, Commonwealth Bank up 1.4 per cent at $70.85 and National Australia Bank 1.1 per cent higher at $26.80. Macquarie Group is also extending its good run, up 1.7 per cent at a new record high of $120.485.