* China manufacturing PMI rises to 51.9 from 50.6 in Feb
* Higher U.S. bond yields help financials
* BHP marks best session in over three weeks
(Updates to close)
By Nikhil Subba
March 31 (Reuters) - 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 .AXJO 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. 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 .AXMM climbed 0.3%, with industry giants BHP Group BHP.AX marking the best session in more than three weeks and Rio Tinto (LON:RIO) RIO.AX gaining over 1%.
The heavyweight financial index .AXFJ 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 U.S. 10-year bond yield US10YT=RR hit a 14-month high in overnight trade. US/
Healthcare stocks .AXHJ gained 0.6%, notching their best day in a week, helped by CSL's CSL.AX 0.8% climb and Cochlear's COH.AX 0.9% rise.
New Zealand's benchmark S&P/NZX 50 index .NZ50 ended 0.9% higher at 12,560.70, with Mercury NZ MCY.NZ and Pushpay Holdings PPH.NZ as top gainers.