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By Nichiket Sunil

Jan 2 (Reuters) - Australian shares rebounded in the year's first trading day, lifted by the resources sector riding on the back of upbeat commodity prices, with analysts predicting that miners could attract increased capital this year after a dismal 2024.

The S&P/ASX 200 index .AXJO ended 0.5% higher at 8,201.2 points on Thursday, although volumes were about half of the monthly average. The benchmark gained 7.5% last year, led by banks.

Miners .AXMM ended 1.2% higher, helped by improved iron ore demand outlook from top consumer China. IRONORE/

Fortescue FMG.AX added 3.1% to clock its best day in three weeks, while larger rivals BHP BHP.AX and Rio Tinto RIO.AX advanced 1.0% and 0.6%, respectively.

Josh Gilbert, a market analyst with trading platform provider eToro, said the mining sector could see increased flows after clocking its worst performance since 2015 last year, driven by improving fundamentals and profit-booking in banks.

China is the key catalyst for miners, and a new stimulus by Beijing early this year would be "a massive boon for iron ore miners like BHP, Rio Tinto and Fortescue", Gilbert said.

"We should begin to see profit-taking within the financial sector, mainly the big banks, with capital flowing into miners offering value after their drawdowns in 2024."

Financials .AXFJ inched 0.3% higher after two sessions of losses, led by National Australia Bank NAB.AX and Westpac WBC.AX, which advanced 0.4% and 0.3%, respectively.

Banks added 28% in 2024, their best since the recovery staged in 2009 following the global financial crisis, fuelled by massive inflows from institutional and retail investors.

Energy stocks .AXEJ saw their seventh consecutive session of gains on Thursday, helped by upbeat crude oil prices. Oil and gas producers Woodside Energy WDS.AX and Santos STO.AX added 1.5% and 1.4%, respectively. O/R

Markets in New Zealand .NZ50 were closed for a holiday.

(Reporting by Nichiket Sunil in Bengaluru; Editing by Mrigank Dhaniwala)

((Nichiket.Sunil@thomsonreuters.com;))

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