Jan 20 (Reuters) - Australian shares climbed on Monday, with miners lifting the benchmark on the back of strong commodity prices, while diversified miner South32 S32.AX rose to its highest in more than a month after beating estimates for second-quarter output.

The S&P/ASX 200 index .AXJO was up 0.3% at 8,331.2 points, as of 2334 GMT. The benchmark closed 0.2% lower on Friday.

Investors in Australia will keenly monitor local inflation data, which is due next week, to gauge the central bank's interest rate trajectory.

The Reserve Bank of Australia $(RBA)$ uses inflation data as a key factor in determining its stance on interest rates. The easing of core inflation in November has fuelled expectations for a potential rate cut in February.

Markets are still pricing in a 73% chance of a reduction of 25 basis points next month, according to the RBA watch tool.

Local miners .AXMM led gains on the benchmark, with a 0.6% jump, as iron ore prices strengthened after a raft of better-than-expected data from top consumer China. IRONORE/

Shares of South32 rose as much as 1.7% to their highest since Dec. 11, as the diversified miner beat Visible Alpha consensus estimates to log a second-quarter manganese production of 1.1 million wet metric ton (wmt).

Separately, mining giants Rio Tinto RIO.AX, BHP Group BHP.AX and Fortescue FMG.AX advanced between 0.7% and 2.1%.

Domestic financials .AXFJ posted modest gains, contributing to ASX 200's climb, with the "Big Four" banks each nudging 0.1% higher.

Shares of Insignia Financial IFL.AX climbed as much as 1.6%, reaching a three-year high, after the company offered to provide CC Capital with access to "non-public, non-exclusive information" to help assess whether the U.S.-based suitor could submit a "further improved proposal".

New Zealand's benchmark S&P/NZX 50 index .NZ50 slipped 0.5% to 13,059.09 points.

Traders in New Zealand are awaiting the release of local inflation data for the fourth quarter later this week.

(Reporting by Shivangi Lahiri in Bengaluru; Editing by Sherry Jacob-Phillips)

((shivangi.lahiri@thomsonreuters.com))

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