Australia shares jump over 1% as miners, banks rebound

* Set for fourth straight monthly gain

* RBA seen holding cash rate at record low - Reuters poll

* Lynas jumps 5.4% on record Q2 sales revenue

Jan 29 (Reuters) - Australian shares jumped more than 1% on Friday, led by a recovery in banks and miners, tracking overnight Wall Street gains as fears over fallout from hedge funds selling long positions to cover shorts waned.

The S&P/ASX 200 index was up 1.1% at 6,725.70 by 2350 GMT, its best session since Jan. 19, after ending about 2% lower on Thursday. But it was on track to rise 1.7% in January, its fourth straight monthly gain.

Overnight, all major U.S. indexes rebounded, pushed by a strong start to earnings season and easing fears over hedge funds selling their long positions after GameStop Corp and AMC Entertainment tumbled following a recent meteoric rise.

Investors’ focus is now on the Reserve Bank of Australia’s policy meeting next week, where it is likely to hold its cash rate at a record low, as well as extend its A$100 billion ($76.76 billion) quantitative easing programme.

Aussie miners were the top boosts to the benchmark, jumping 1.3%, with heavyweights BHP Group and Rio Tinto gaining 1.3% and 0.9%, respectively.

Lynas Rare Earths soared 5.4%, after the world’s largest producer of rare earths outside China posted record high second-quarter sales revenue.

Financials rose nearly 1%, with all the ‘Big Four’ banks jumping up to 1%.

The country’s No. 2 lender National Australia Bank advanced up to 1.1% on acquisition of nearly 82% stake in an online banking platform 86 400 Holdings for up to A$220 million.

Healthcare and technology firms also rose up to 1.7% and 2.9%, respectively.

In New Zealand, the benchmark S&P/NZX 50 index was up as much as 1.5% at 13,279.96. It was set to gain 0.8% for the month.

Financials and utilities pushed the index higher, with NZ-listed shares of Westpac rising 2.2% and electricity generator Meridian Energy 3.3%.

$1 = 1.3028 Australian dollars Reporting by Sameer Manekar in Bengaluru; Editing by Rashmi Aich