WRAPUP 1-Australian consumers cheer as nation dodges recession

* Australian consumer sentiment index jumps 12.7 pct in June

* Biggest monthly rise in 22 years

* New home loans rise for seventh straight month

By Anirban Nag

SYDNEY, June 10 (Reuters) - Australian consumer sentiment posted its biggest monthly rise in 22 years in June as consumers cheered news that the country escaped a recession, lessening the need for further cuts in interest rates in coming months.

Signs of stabilisation in the global economy, rallying stock markets and a rising Australian dollar AUD= also helped drive confidence higher, with consumers growing more upbeat about their finances.

"This is a truly remarkable result," said Bill Evans, chief economist at Westpac. "(It) only strengthens the case for rates to remain on hold."

Confirming the brightening mood, government data on Wednesday showed demand for home loans rising for the seventh straight month as record low interest rates and generous government incentives saw buyers flock to the property market.

The survey of 1,200 people by the Westpac-Melbourne Institute showed its index of consumer sentiment jumped 12.7 percent to 100.1 in June, the highest level in 16 months.

The jump in confidence was the second-largest recorded increase in the index since the survey began in 1974, and comes just a day after another private sector survey showed business confidence boasting its biggest jump since 2001.

The Reserve Bank of Australia (RBA) skipped a chance to ease this month and is expected to keep rates at 3.0 percent for some time to come. It has slashed the cash rate by 450 basis points since September to spur the flagging economy, and investors RBAWATCH expect it to remain on hold until December.

The Aussie dollar AUD= gained after the consumer sentiment data, climbing to $0.8046, from around $0.8014 beforehand. It has risen more than 25 percent since early March, amid rising risk appetite among investors.

Australian shares .AXJO also rose in part on the confidence report, with supermarket operators such as Wesfarmers (WES.AX) and Woolworths (WOW.AX) gaining over 1 percent. Speculation that Australian rates may be near their bottom pushed three-year bond futures YTTc1 down 0.015 points to 95.64.

Financial markets CSRBA1Y=CSAU are pricing in 50 basis points of rate hikes in the coming 12 months as they bet a quick recovery, led by a turnaround in China, will probably push the central bank to reverse gears sooner rather than later to contain any inflationary pressures as the economy gathers steam again.

China is a large buyer of the country's industrial raw materials.

Westpac's Evans said the marked improvement in sentiment seemed to be linked to the release of data last week showing the Australian economy grew in the first quarter, avoiding a second consecutive quarter of contraction -- the typical definition of recession.