Sydney - Australian stocks rallied at the bell on Monday after a horror trading session at the end of last week saw them slip to a five-year low.

In early trading, the ASX 200 gained 221 points, or 5.5 per cent, to 4,182 to break the 4,000 barrier.

Commsec economist Craig James said bargain hunting would buoy the market following Friday's 8.3-per-cent crash, the biggest drop since 1987.

"Investors who are embracing the share market at the moment, they may not get in at the total bottom, but we believe we're pretty close to the bottom and that shares are trading very, very cheaply, the cheapest in around about 24 years," James told national broadcaster ABC.

"There're a lot of bargains to be had, and if people have got confidence for the longer term - two, three, four years out - they're going to be well-rewarded by buying in the current environment." (dpa)