* Energy stocks mark best day since October 2008
* Major Aussie banks can absorb rise in credit loss - S&P Global Ratings (Updates to close)
By Nikhil Subba
April 1 (Reuters) - Australian shares closed almost 4% higher on Wednesday, with energy and mining sectors leading gains, after upbeat data from the country's biggest trading partner China showed some signs of improvement.
The S&P/ASX 200 index .AXJO finished 3.6% higher at 5,258.60, recovering from the benchmark's 2.02% fall on Tuesday. The benchmark closed at its highest level since March 17.
China's factory activity improved in March after plunging a month earlier, a private survey showed on Wednesday, but the bare minimal growth showed the intense pressure on businesses. Separately, the country plans to step up fiscal and monetary policy adjustments to counter the pandemic's economic impact. remains the lynch-pin for Australia's economic recovery, in particular our big-ticket items such as iron ore... Data from China showed our biggest trading partner has a pulse," said James McGlew, executive director of corporate stockbroking at Argonaut.
However, worries persist over the country slipping into its first recession in almost three decades, as its government pumped in A$320 billion into the economy through several stimulus measures.
The division between those who predict financial gloom and those who believe the market currently represents good value "is producing the wild market swings as the balance between the two groups shifts," said Michael McCarthy, chief market strategist at CMC Markets.
The energy sub-index .AXEJ closed 7.5% higher, a two-week peak and marked its best day since October 2008.
Oil Search OSH.AX settled 12.6% higher and Santos STO.AX gained about 10%.
Miners .AXMM rose 3.4%, their best session in a week, after Brazil's Vale said the resumption of its lost production capacity could be postponed due to the coronavirus. giant BHP Group BHP.AX rose 4.3%, its biggest percentage gain since March 25 and Rio Tinto (LON:RIO) RIO.AX gained nearly 5%.
Financial stocks .AXFJ closed 2.6% higher, with all the "Big Four" lenders ending in positive territory.
S&P Global Ratings said Australia's major banks have sizeable headroom within earnings to absorb multifold increase in credit loss. New Zealand, the benchmark S&P/NZX 50 index .NZ50 gained 1.3% to finish at 9,926.08.
Movie software maker Vista Group International VGL.NZ rose nearly 8% and Auckland International Airport AIA.NZ ended 5.2% higher.