Australia shares notch best month in four as China data lifts rebound bets

Australian shares ended higher on Wednesday, capping their best month since last November, lifted by strong factory data from the country's top trade partner China and as investors adjusted their holdings for some month-end "window dressing".

The S&P/ASX 200 index closed 0.8% higher at 6,790.70 after gaining as much as 1.8% earlier in the day. The benchmark gained 1.76% on a monthly basis and ended the first quarter 3.1% higher.

Investor sentiment was aided by China's manufacturing Purchasing Manager's Index (PMI) data, which showed surprisingly upbeat manufacturing activity in March as factories cranked up production after a brief lull during the Lunar New Year holiday.

"Today has been a combination of month-end 'window dressing', also the Chinese PMI was quite positive," Henry Jennings, senior analyst at Marcustoday Financial Newsletter said.

"Window dressing" is trading activity towards the end of a quarter or fiscal year that is designed to improve the appearance of a portfolio.

"(The PMI data) was above expectations and it shows that the Chinese economy is doing quite well ... which obviously helps our resources sector and our economy as well as we're so geared to it."

Australian mining stocks climbed 0.3%, with industry giants BHP Group marking the best session in more than three weeks and Rio Tinto gaining over 1%.

The heavyweight financial index closed its best session since March 9 about 0.7% higher, with the so-called "Big Four" banks finishing in the positive territory.

"Bond yields both in United States and Australia are back to their highs ... When you got yields going up, banks tend to be the obvious trade and they've been benefiting out of it," Mathan Somasundaram, chief executive officer at Deep Data Analytics said.

The US 10-year bond yield hit a 14-month high in overnight trade.

Healthcare stocks gained 0.6%, notching their best day in a week, helped by CSL's 0.8% climb and Cochlear's 0.9% rise.

New Zealand's benchmark S&P/NZX 50 index ended 0.9% higher at 12,560.70, with Mercury NZ and Pushpay Holdings as top gainers.