(Adds details, comments, stocks on the move)
SYDNEY, March 27 Australian shares rose 0.3 percent on Wednesday led by blue chip miners on strong resource prices and after the Dow Jones Industrial Average posted a record high buoyed by strong data, but gains were capped by losses in the financial sector.
Global iron ore miners BHP Billiton Ltd and Rio Tinto Ltd rose 0.7 percent and 1.0 percent respectively.
Financials were moderately weaker, with top lender Commonwealth Bank of Australia slipping 0.3 percent. Australia New Zealand Banking Corp was trading flat while Westpac Banking Corp bucked the trend, inching up 0.1 percent. National Australia Bank fell 0.1 percent.
The S&P/ASX 200 index 14.2 points higher to 4,964.4 by 0025 GMT. The benchmark fell 0.8 percent on Tuesday, its lowest close since February 7.
"The reason why financials are slightly down is because we saw European political instability with regards to the fact that the Cyprus deal could be a model rather than the exception," said Evan Lucas, market strategist at IG Markets.
"They have been quite strong and they're now looking top heavy, a lot of brokers are also coming out and downgrading views on the banks over the last couple of weeks."
Banks in Cyprus will remain closed until Thursday and will then be subject to capital controls to prevent a run on deposits. President Nicos Anastasiades said late on Monday that a 10-billion-euro ($13 billion) rescue plan approved over the weekend was "painful" but essential to avoid economic meltdown.
Elsewhere, defensives were mainly firmer, blood products maker CSL Ltd added 0.3 percent while top telco Telstra Ltd inched up 0.2 percent. Food retailers Woolworths Ltd rose 0.2 percent while Wesfarmers slipped 0.1 percent utility AGL Energy slipped 0.5 percent.
Gold miners were moderately weaker after bullion fell for the third session in a row as the return of relative calm in Europe after a deal to bailout Cyprus's banks eased market fears, reducing the metal's appeal. Newcrest Mining Ltd lost 0.7 percent while rival Regis Resources Ltd plumbed 2.4 percent, capping broader gains.
Insurers were firmer, Suncorp Group rallied 1.3 percent, Insurance Australia Group added 0.5 percent. QBE Insurance climbed 2.4 percent after the company said at its AGM that it sees 2013 gross written premium of $18.5 billion to $19 Billion.
U.S. stocks rallied on Tuesday, with the Dow climbing more than 100 points to another record close and the S&P 500 coming within striking distance of its all-time closing high, as strong data on home prices and manufacturing orders added to optimism about the economy.
New Zealand's benchmark NZX 50 index added 0.9 percent, or 40.6 points, to 4,386.6.
STOCKS ON THE MOVE
* World no.4 iron ore miner Fortescue Metals Group rebounded 4.3 percent to A$3.975 after JP Morgan upgraded its recommendation on the stock to overweight, citing a material upside to the share price on a 12-month view. The battered stock has fallen around 27 percent since mid-February.
* Virgin Australia Holdings Ltd was trading flat at A$0.40 after the High Court of Singapore sanctioned its Skywest acquisition.
* Top airline Qantas Airways climbed 1.45 percent to A$1.745 after the Australian Competition and Consumer Commission authorised the alliance between Qantas and Emirates until 2018.
* Lynas Corp dropped 2.5 percent to A$0.580 after the miner said a Malaysian court had dismissed a challenge by protesters against its long-delayed rare earth processing plant.
(Reporting by Thuy Ong; Editing by Eric Meijer)