Australia shares rise as U.S. prompts investors to celebrate China stimulus

* Investors join U.S. China rally

* Iron ore back above $50

* More rate cuts still on the table (Adds analysis, quotes, stocks on the move)

SYDNEY/WELLINGTON, April 21 (Reuters) - Australian shares rose on Tuesday as investors belatedly cheered China's boost to bank lending, and a rebound iron ore prices, which remained near 10-year lows, spurred resources higher.

Newly released notes from an April 7 Reserve Bank of Australia meeting which left open the prospect of further rate cuts also gave investors a reason to buy.

On Sunday, China cut the amount of cash banks must hold in reserve, a move expected to pump more money through the economy of Australia's biggest trading partner.

Australian investors had initially given a muted response because of concern about the collapsing price of iron ore, needed for steel making.

That concern eased on Tuesday after the iron ore price edged back over $50 overnight and as Wall St rallied, said Quay Equities head of trading Tristan K'Nell.

"Locally we didn't respond as well (to the China stimulus), maybe because the resource sector has seen a lot of negativity," he said. "The U.S. market is probably seeing that if the Chinese market runs hard, their market is going to run hard."

By 0232 GMT, the S&P/ASX 200 index was up 37.9 points or 0.7 percent at 5871.0, its first gain in three sessions.

Iron ore miners BHP Billiton (NYSE: BBL - news) and Rio Tinto (Xetra: 855018 - news) rose 2.2 percent and 1.7 percent respectively. Rio missed analyst forecasts in a quarterly export update, but maintained its full year production forecast.

World No.4 iron ore miner Fortescue Metals Group fell 1.2 percent amid concerns about its profitability.

Energy producers fell in line with the oil price, with Santos and Woodside Petroleum (Xetra: WOPA.DE - news) down 0.5 percent and 1 percent respectively. Papua New Guinea-focused Oil Search held steady as it stuck to full-year production forecasts despite a drop in first-quarter revenue.

Commonwealth Bank of Australia (Other OTC: CBAUF - news) was up 0.4 percent, National Australia Bank rose 0.7 percent and Australia and New Zealand Banking Group added 0.3 percent.

New Zealand shares shunned early gains and fell for a third successive session, with the benchmark NZX50 index down 0.2 percent to 5,811.26.

Spark, the market's second biggest stock, eased to a seven month low, and number three stock Contact Energy (NZSE: CEN.NZ - news) dropped 1.5 percent to an eight-month low.

Meridian Energy slid 2.6 percent with shareholders selling before paying a final instalment on part-paid shares next month.

British-based yarn manufacturer Coats slumped 3.8 percent after veteran New Zealand corporate raider Ron Brierley quit as director.

Telecom Chorus rose 1 percent to its highest since August 2013, while national carrier Air New Zealand was up 1.8 percent as it reported a lift in load factor last month.

(Reporting by Byron Kaye and Gyles Beckford; Editing by Simon Cameron-Moore)