(Adds analysis, quotes, stocks on the move)
SYDNEY, July 4 (Reuters) - Australian shares rebounded 1 percent on Thursday, as Wall Street rose modestly higher overnight and a rise in metals prices underpinned mining stocks, but political turmoil in Portugal and concerns on slowing growth in China pared early gains.
Financials buoyed the market. Westpac Banking Corp rose 0.5 percent and Australia and New Zealand Banking Group rallied 1 percent.
Miners were also stronger. Rio Tinto Ltd added 0.8 percent while Fortescue Metals Group soared 3.9 percent. BHP Billiton Ltd edged 0.1 percent higher.
The S&P/ASX 200 index climbed 46.3 points to 4,790.4 by 0144 GMT.
The local bourse has had a volatile week with broad swings in both directions, plunging to a low of 4,702.7 points on Monday before rallying as high as 4,834 on Tuesday after the Reserve Bank said there might be room for further cuts in its cash rate. The benchmark fell 1.9 percent on Wednesday.
"Throw in concerns about U.S. stimulus, throw in concerns about China's growth and you've got plenty of reasons for people to be active in the market," said Michael McCarthy, chief market strategist at CMC Markets.
"Investors are tending to go with the daily momentum, I expect we'll see it settle over the next week or so."
Meanwhile, defensives rallied. Consumer retail staple Wesfarmers Ltd rose 0.8 percent while blood products maker CSL Ltd soared 2.7 percent. Telecommunications provider Telstra Corporation Ltd climbed 1 percent.
The index hit a year-high of 5,249.6 on May 15 but has since been dragged down by recent data indicating slowing economic growth in China and concerns about the U.S. Federal Reserve's plans to curtail its stimulus.
Also unsettling investors, the Portugese government is struggling to survive following the resignations of its foreign minister and finance minister this week, which could deprive if of a majority in Parliament.
Portugal's stock market dropped more than 5 percent, suffering its biggest fall in around three years.
U.S. stocks ended slightly higher in a volatile half-day session on Wednesday as traders squared positions before the Independence Day holiday and Friday's job market data.
New Zealand's benchmark NZX 50 index rose 0.2 percent or 7.7 points to 4,458.5.
STOCKS ON THE MOVE
* Evolution Mining Ltd surged 4 percent to A$0.65 after the gold miner said its production for the June quarter totalled 112,526 ounces, a 34 percent increase on the March quarter.
* Hills Holdings Ltd rocketed 7.6 percent to A$1.13, its highest point since April 8, after the company confirmed its earnings outlook and expects its full year underlying net profit after tax to be slightly higher.
* Western Areas Ltd climbed 3 percent to A$2.72 after saying it will exceed its full year guidance.
(0143 GMT) (Reporting by Thuy Ong; Editing by Eric Meijer)