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March 21 (Reuters) - Australian shares closed 1.1% higher on Thursday, supported by heavyweight financials and miners, as traders cheered the U.S. Federal Reserve's decision to stay on track for three rate cuts this year.

The S&P/ASX 200 index .AXJO ended higher at 7,782.00 points, with the benchmark index closing at its highest level since March 8 and posting its best daily gain since early February.

Overnight, the Fed left U.S. rates on hold between 5.25% and 5.5%, as expected, and nudged up inflation forecasts.

"The perception that the Fed is now more tolerant of short-term inflation bumps could lead the Reserve Bank of Australia (RBA) to alleviate its inflation concerns and possibly close the door to further interest rate hikes confidently at its next meeting," said Hebe Chen, market analyst, IG Markets.

In Sydney, data showed Australian employment rebounded sharply in February and the unemployment rate fell far below projections, indicating that the labour market remained strong.

"Demand for labour is moderating and is not expected to keep up with growth in labour supply," analysts at Westpac wrote, adding that more updates will be necessary before the RBA adjusts its labour market assessment.

On the bourse, rate-sensitive financials .AXFJ jumped 1.7% with the "Big Four" banks climbing between 1.1% and 2.6%.

Miners .AXMM rose 1.2%, with BHP Group BHP.AX and Fortescue FMG.AX climbing 0.8% and 1.7%, respectively.

Gold stocks .AXGD jumped 3.8%, hitting their highest level since Jan. 9 after bullion hit a record high. GOL/

Sector majors Northern Star Resources NST.AX and Evolution Mining EVN.AX climbed 2.3% and 5.2%, respectively.

In New Zealand, benchmark S&P/NZX 50 index .NZ50 rose 0.7% to finish at 11,915.710 points.

Shares of Fonterra FCG.NZ ended 2.1% firmer at their highest closing level since Jan. 22 after the dairy firm posted an improved half-year profit and dividend.

(Reporting by Megha Rani in Bengaluru; Editing by Sherry Jacob-Phillips)

((Megha.Rani2@thomsonreuters.com;))

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