* Banks stocks lead rally
* Index on track to end week in black
* 135 shares up, 60 down and 5 unchanged (Adds analysis, quotes, stocks on the move)
By Pauline Askin and Cecile Lefort
SYDNEY/WELLINGTON, Sept 18 (Reuters) - Australian shares rose 0.5 percent, recovering from early losses on Friday following optimistic remarks from the central bank about the economy, although global growth concerns capped a strong rally after the U.S. Federal Reserve left rates unchanged.
RBA Governor Glenn Stevens gave an upbeat assessment of the economy, noting he was satisfied with the current monetary policy setting and comfortable with the level of the Australian dollar.
The S&P/ASX 200 index .AXJO rose 28.18 points to 5,175.0 by 0227 GMT. The benchmark rose 0.94 percent on Thursday. The index is on track to post a second straight week of gains.
"The key issue here is the market is trying to digest the signal that the Fed has made. And that is, it's a bit too risky to lift rates right now," said Damien Hennessy, co-founder, Heurisic Investment Systems.
Banks led the rally with Commonwealth Bank CBA.AX , NAB NAB.AX and ANZ ANZ.AX up 0.7 percent each.
Gold miner Newcrest Mining NCM.AX jumped 6.52 percent helped by a near two-week high gold price. bounced 1.1 percent higher, trimming the previous session's losses after it announced taking on new debt.
The index edged up 0.3 percent, or 15.71 points, to 5,709.940. It briefly touched 5,718.72, its highest since late August and was poised to show a gain of around 1 percent for the week.