Australia shares down 1.2 pct despite better China PMI

(Updates though market close)

CANBERRA Nov 1 (Reuters) - Australian shares fell 1.2 percent on Thursday, the biggest one-day percentage loss since late July, as miners and banks dragged on the market and a rebound in China's manufacturing data failed to boost investor sentiment.

The benchmark S&P/ASX 200 index fell 54.1 points to 4,462.9, according to the latest data, losing ground below the key 4,500 level.

It rose 0.7 percent to a one-week closing high on Wednesday, and added 3 percent in October, its fifth straight month of gains.

China's October official PMI rose to 50.2 from 49.8 in September, almost matching a forecast 50.3, and the final reading of the HSBC PMI hit an 8-month high of 49.5.

But the improved data out of China failed to support the Australian market. Index-heavy BHP Billiton dropped 1.3 percent, while major rival Rio Tinto lost 1.2 percent.

New Zealand's benchmark NZX 50 index dropped 0.7 percent to 3,931.9.

(Reporting by Maggie Lu Yueyang; Editing by Kim Coghill)